Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
A MESSAGE FROM  
THE INSPECTOR GENERAL  
I am pleased to present this Semiannual Report to Congress summarizing activities of the Office of 
Inspector General (OIG), Department of Health and Human 
Services (HHS or the Department), for the  
6-month period that ended September 30, 2017.  OIGs 
mission is to protect the integrity of HHS programs and the 
health and welfare of the people they serve.  We accomplish 
our mission by preventing and detecting fraud, waste, and 
abuse; identifying opportunities to increase the efficiency 
and effectiveness of HHS programs; and holding 
accountable those who do not meet program requirements 
or who violate Federal laws.   
 
Our work during this reporting period reflects our 
heightened attention to delivering high-impact results while 
streamlining our approach to oversight.  Data and our 
growing data analytics capabilities played a significant role 
in these efforts.  We continue to cultivate a workforce with 
the skills and talents to excel in a data-driven oversight 
environment.  This strategy is paying dividends for the 
American public.  By leveraging advanced analytic 
techniques to detect potential vulnerabilities and fraud trends, we are better able to target our resources 
at those areas and individuals most in need of oversight, leaving others free to provide care and services 
without unnecessary disruption.  In July 2017, OIG and its law enforcement partners conducted the largest 
National Health Care Fraud Takedown in history.  Sophisticated data analytics were critical.  The end 
resultcharges against more than 400 defendants in 41 Federal districts related to schemes involving 
about $1.3 billion in false billings to Medicare and Medicaidprotected the programs and sent a strong 
signal that theft of taxpayer funds will not be tolerated.  Notably, 120 defendants, including doctors, were 
charged for their roles in prescribing and distributing opioids and other dangerous narcotics, and 295 
individuals were served with exclusion notices for conduct related to opioid diversion and abuse.  Also in 
July we published a data brief describing concerns about extreme use and questionable prescribing of 
opioids in Medicare Part D.   
 
Our heightened focus on prescription drug abuse, including the serious problem of opioid abuse, 
continues.  Other continuing priorities include improving the safety and quality of childrens services; 
strengthening care in noninstitutional settings, including home health care; and enhancing Medicaid 
program integrity.  Looking forward, we anticipate our work to grow in key areas such as grants 
management, mental health services, managed care programs and value-based care, and the quality and 
safety of programs serving American Indian and Alaska Native beneficiaries.  We will look at common 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
issues across all of these areas, including issues related to information technology, cybersecurity, and the 
completeness, accuracy, and timeliness of data. 
 
Since Congress established OIG in 1976, we have worked collaboratively with our partners to protect and 
oversee HHSs vital health and human services programs.  This collaboration across Federal agencies and 
among Federal, State, and local governments has never been more crucial or more fruitful.  We remain 
open to appropriate opportunities to collaborate with the private sector to advance shared interests in 
effective, efficient, economical programs.  We are adapting to an ever-evolving health and human services 
landscape.  Today, as a modern OIG, we are using data and technology in innovative ways to enhance and 
target our oversight efforts.  But none of the achievements of this office would be possible without the 
dedication and professionalism of OIGs employees.  Once again, I would like to express my appreciation 
to Congress and to the Department for their sustained commitment to the important work of our office. 
 
Daniel R. Levinson  
Inspector General 
   
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
TABLE OF CONTENTS 
 
OIGs Approach To Driving Positive Change  1 
   
          Highlights of OIG Accomplishments  4 
          OIG Participation in Congressional Hearings  11 
   
Selected Acronyms and Abbreviations  12 
 
Oversight Activities by Program Area  14 
   
Centers for Medicare & Medicaid Services  14 
             
   
Legal and Investigative Activities Related to the Medicare and Medicaid Programs                                     31  
                                                                            
   
Public Health Agencies  47 
            
    
Other HHS-Related Reviews and Investigations   56 
            
Appendices   
   
A: Questioned Costs and Funds To Be Put to Better Use  66 
B: Savings Decisions Supported by OIG Recommendations  73 
C: Peer-Review Results  76 
D: Summary of Sanction Authorities  78 
E: Reporting Requirements in the Inspector General Act of 1978  81 
F: Reporting Requirements in the Inspector General Empowerment Act of 2016  83 
G: Anti-Kickback StatuteSafe Harbors  90 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
OIGs Approach to Driving  
Positive Change 
 
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS or Department) Office of 
Inspector General (OIG) provides independent and objective oversight that promotes 
economy, efficiency, and effectiveness in HHS programs and operations.  OIGs program 
integrity and oversight activities are shaped by legislative and budgetary requirements and 
adhere to professional standards established by the Government Accountability Office 
(GAO), the Department of Justice (DOJ), and the Inspector General community.  Through 
a nationwide network of audits, investigations, and evaluations, OIG carries out its mission 
to protect the integrity of HHS programs and the health and welfare of the people served 
by those programs.  OIGs work is conducted by three operating componentsthe Office 
of Audit Services, the Office of Evaluation and Inspections, and the Office of 
Investigationswith assistance from the Office of Counsel to the Inspector General and 
Executive Management. 
 
  OIG Organization 
 
The Office of Audit Services (OAS).  OAS conducts audits of HHS programs and operations 
through its own resources or by overseeing audit work done by others.  Audits examine the 
performance of HHS programs and/or of HHSs grantees and contractors in carrying out 
their respective responsibilities and provide independent assessments of HHS programs 
and operations.  These assessments help reduce waste, abuse, and mismanagement and 
promote the economy, efficiency, and effectiveness of programs and operations 
throughout HHS. 
 
The Office of Evaluation and Inspections (OEI).  OEI conducts national evaluations to 
provide HHS, Congress, and the public with timely, useful, and reliable information on 
significant issues.  These evaluations focus on preventing fraud, waste, and abuse and 
promoting economy, efficiency, and effectiveness in HHS programs.  OEI reports also 
present practical recommendations for improving program operations.   
 
The Office of Investigations (OI).  OI conducts criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs, operations, and 
beneficiaries.  With investigators working in almost every State, the District of Columbia, 
and Puerto Rico, OI coordinates with DOJ and other Federal, State, and local law 
enforcement authorities.  OI also coordinates with OAS and OEI when audits and 
evaluations uncover potential fraud.  OIs investigative efforts often lead to criminal 
convictions, administrative sanctions, or civil monetary penalties (CMPs).   
 
The Office of Counsel to the Inspector General (OCIG).  OCIG provides legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act 
(FCA), program exclusion, self-disclosure, and CMP cases.  In connection with these cases, 
OCIG also negotiates and monitors corporate integrity agreements (CIAs).  OCIG renders 
advisory opinions, issues compliance program guidance, publishes fraud alerts, and 
provides other guidance to the health care industry about the anti-kickback statute and 
other OIG enforcement authorities.   
 
Executive Management (EM).  EM is composed of the Immediate Office of the Inspector 
General and the Office of Management and Policy.  EM is responsible for coordinating OIG 
activities and providing mission support, including setting vision and direction for OIGs 
priorities and strategic planning; ensuring effective management of budget, finance, human 
resource management, and other operations; and serving as a liaison with HHS, Congress, 
and other stakeholders.  EM plans, conducts, and participates in a variety of cooperative 
projects within HHS and with other Government agencies.  EM provides critical data 
analytics, data management, and information technology (IT) infrastructure that enables 
OIG components to conduct their work efficiently and effectively.  
 
  
OIG Strategic  HHS OIG Strategic Plan 
Publications  As delineated in OIGs Strategic Plan for 2014-2018, OIGs approach to protecting the 
  integrity of HHS programs has four key goals: (1) to fight fraud, waste, and abuse; (2) to 
promote quality, safety, and value; (3) to secure HHS programs future; and (4) to advance 
excellence and innovation.  These goals drive OIGs work planning for audits and 
evaluations as well as OIGs approach to enforcement.  These goals also serve as a starting 
point for OIGs own assessment of its effectiveness. 
Top Management Challenges Facing HHS 
To focus the Departments attention on the most pressing issues, each year OIG identifies 
the Top Management and Performance Challenges facing the Department.  These top 
challenges arise across HHS programs, and they cover critical HHS responsibilities that 
include delivering quality services and benefits; exercising sound fiscal management; 
safeguarding public health and safety; and enhancing cybersecurity.   
OIG Work Plan 
OIGs Work Plan sets forth various projects that OIG plans to undertake during the fiscal 
year (FY) and beyond.  Projects listed in the Work Plan span the Departments operating 
divisions, which include the Centers for Medicare & Medicaid Services (CMS); public health 
agencies such as the Centers for Disease Control and Prevention (CDC) and the National 
Institutes of Health (NIH); and human services agencies such as the Administration for 
Children and Families (ACF) and the Administration for Community Living (ACL).  The Work 
Plan also includes oversight of State and local governments use of Federal funds as well as 
the administration of the Department.  Some of the projects described in the Work Plan are 
statutorily required.   
 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Compendium of Unimplemented Recommendations 
OIG drives positive change not only by identifying risks, problems, abuses, and deficiencies, 
but also by recommending solutions to address them.  OIG maintains a list of 
recommendations it has made to address vulnerabilities detected in its reviews, and it 
keeps track of whether these recommendations have been implemented.  OIG 
systematically follows up on its recommendations with the relevant HHS programs.  From 
among the recommendations that have not been implemented, OIG identifies the top 
recommendations that, if implemented, are likely to garner significant savings and 
improvements in quality, efficiency, and effectiveness.  OIG compiles these 
recommendations in the Compendium of Unimplemented Recommendations.   
HHS OIGs Semiannual Report to Congress  
HHS OIGs Semiannual Report(s) to Congress (Semiannual Reports) describe OIGs work on 
identifying significant problems, abuses, deficiencies, remedies, and investigative outcomes 
relating to the administration of HHS programs and operations that were disclosed during 
the reporting period.  In the report below, we present OIG expected recoveries, criminal 
and civil actions, and other statistics as a result of our work for the entire FY 2017.  We also 
highlight some of our work completed during this semiannual reporting period, April 1, 
2017, through September 30, 2017.  
 
 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Highlights of OIG Accomplishments 
   
HHS OIGS SEMIANNUAL REPORT TO CONGRESS (Semiannual Report) describes OIGs 
work identifying significant risks, problems, abuses, deficiencies, remedies, and investigative 
outcomes relating to the administration of HHS programs and operations that were 
disclosed during the reporting period. In the highlights section below, we present OIG 
expected recoveries, criminal and civil actions, and other statistics as a result of our work for 
the entire FY 2017. We also highlight our most significant work completed during this 
semiannual reporting period, April 1, 2017, through September 30, 2017. 
 
Fighting Fraud in OIG remains at the forefront of the Nations efforts to fight fraud in HHS programs and 
hold wrongdoers accountable for their actions.  Not only does fraud increase HHS costs, it 
HHS Programs  
increases risk and potential harm to beneficiaries.  During FY 2017, OIG reported the 
Highlights of 
following.  
Enforcement 
Accomplishments 
 To 
combat health care fraud, OIG partners with DOJ; the State Medicaid Fraud Control Units 
(MFCUs or Units); and other Federal, State, and local law enforcement agencies.  These 
partnerships include the Medicare Fraud Strike Force teams, which detect, investigate, and 
prosecute health care fraud through a coordinated and data-driven approach.  Since its 
inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 
defendants who collectively have falsely billed the Medicare program for over $12.5 billion.   
The following examples highlight some of our significant enforcement accomplishments 
during this semiannual reporting period. 
 
OIG and partners executed the largest national health care fraud takedown 
in history.  In July 2017, OIG and our Federal and State law enforcement partners led the 
largest health care fraud takedown in history.  More than 400 defendants in 41 Federal 
districts were charged with participating in fraud schemes involving about $1.3 billion in 
false billings to Medicare and Medicaid.   
 
Texas doctor sentenced to 35 years, $268 million in restitution for massive 
home health fraud scheme.  Dr. Jacques Roy was sentenced to 35 years in prison and, 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
jointly and severally with his co-defendants, ordered to pay $268.1 million in restitution 
following his conviction on several counts of health care fraud.  OIGs investigation found 
that Roy and his co-defendants were involved in a large-scale, sophisticated scheme to 
improperly recruit patients and bill Medicare for unnecessary home health services. 
 
Drug manufacturer agreed to pay $465 million and entered into corporate 
integrity agreement to resolve allegations of improper drug classification.  
Mylan Inc. and Mylan Specialty L.P. (collectively, Mylan) agreed to pay $465 million to 
resolve FCA liability associated with allegations that Mylan improperly classified EpiPen as a 
generic drug for purposes of the Medicaid drug rebate program, resulting in underpaid 
rebates to Medicaid and overcharges to covered entities participating in the 340B Drug 
Discount Program.  Mylan also entered into a 5-year CIA with OIG. 
 
Vendor of electronic health record software agreed to pay $155 million to 
settle false claims allegations.  eClinicalWorks, LLC (ECW), and three of its senior 
executives agreed to pay $155 million for allegedly causing health care providers to submit 
false claims in connection with the Medicare and Medicaid Electronic Health Record 
Incentive Programs by concealing from ECWs customers that ECWs software did not 
comply with the requirements for meaningful use certification.  ECW also entered into 
a 5-year CIA with OIG. 
 
Health center CEO sentenced to 18 years for fraud scheme.  
Jonathan Wade Dunning, CEO of Birmingham Health Center, was convicted on 98 counts 
related to his embezzlement of Federal grant funds.  Dunning was sentenced to 18 years in 
prison and ordered to pay $13.5 million in restitution.  He and his nine companies were also 
debarred for 10 years. 
 
Curbing the  Addressing the opioid abuse epidemic is a top priority for OIG.  OIG has a longstanding 
and extensive history of investigative and oversight work focused on the alarming problem 
Opioid Epidemic 
of prescription drug abuse, including opioids, as well as non-controlled substances that are 
often abused along with opioids (known as potentiators).  We investigate opioid fraud 
and diversion cases and use advanced data analytics and tools to detect suspected 
problems for further review.  Our work focuses on strengthening the integrity of HHS 
prescription drug and addiction treatment programs and protecting at-risk beneficiaries.  
Highlights from this semiannual reporting period include the following. 
 
National takedown included largest number of opioid-related defendants.  
OIG, along with our State and Federal law enforcement partners, participated in an 
unprecedented nationwide health care fraud takedown in July 2017.  The takedown 
included opioid-related charges against 120 individualsthe largest number ever in 
a health care fraud takedown.  The defendants included 27 doctors.  In addition, OIG issued 
295 exclusion notices related to the use and abuse of controlled substances. 
 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
OIG identified concerns about extreme use and questionable prescribing of 
opioids in Medicare Part D.  In 2016, half a million beneficiaries received high 
amounts of opioids through Medicare Part D, and almost 90,000 of them were at serious 
risk of opioid misuse or overdose.  Moreover, 401 prescribers had questionable prescribing 
patterns for the beneficiaries at serious risk.  OIG and CMS are taking appropriate actions 
with respect to these prescribers.  (See OIGs report, OEI-02-17-00250.) 
 
Pennsylvania doctor sentenced to 25 years for charges related to improper 
prescribing.  Dr. Jeffrey Bado was convicted of 307 felony counts, including maintaining a 
drug-involved premises, drug distribution resulting in a death, health care fraud, and 
making false statements to Federal agents.  Bado was sentenced to 25 years in prison.   
 
Fraudulent medical practice and pharmacy co-conspirators sentenced.  
Three co-conspirators connected with health care provider Compassionate Doctors, PC, 
were convicted of charges resulting from their involvement in an unlawful prescription drug 
operation.  The defendantsowner Sardar Ashrafkhan, Dr. Adelfo Pamatmat, and 
pharmacist Nadeem Iqbalwere sentenced to a combined 46 years and 4 months in 
prison and ordered to pay $10.7 million in restitution.   
 
 
Protecting  OIGs goal to promote quality, safety, and value includes a focus on protecting Medicare 
and Medicaid beneficiaries from substandard care, abuse, and neglect.  We direct particular 
Vulnerable 
oversight attention to those who may be especially vulnerable to these risks, such as 
Beneficiaries in 
nursing home residents and beneficiaries with developmental disabilities who receive care 
Nursing Homes 
from community-based providers.  Significant OIG work during this semiannual period 
and Non- includes the following. 
Institutional   
Settings  OIG uncovered over 100 instances of potential abuse or neglect of 
Medicare beneficiaries in skilled nursing facilities (SNFs).  OIGs review of 
records from emergency room visits by Medicare beneficiaries residing in SNFs indicates 
that the injuries of 134 beneficiaries may have resulted from potential abuse or neglect.  
More than a quarter of these incidents may not have been reported to law enforcement at 
the time.  OIG has referred all 134 incidents to appropriate law enforcement officials and 
CMS and suggested immediate actions for CMS to better protect beneficiaries.  (See OIGs 
early alert, A-01-17-00504.) 
 
OIG identified deficiencies in Maines oversight of critical incidents 
involving Medicaid beneficiaries with developmental disabilities.  Maine failed 
to demonstrate that it has a system to ensure the health, welfare, and safety of its 
beneficiaries with developmental disabilities who are covered by its Medicaid waiver 
program.  OIG foundamong other problemsthat Maine did not ensure that providers 
reported and reviewed all critical incidents; did not investigate and immediately report to 
law enforcement all incidents involving suspected abuse, neglect, or exploitation; and did 
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  Department of Health and Human Services Office of Inspector General 
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not ensure appropriate reporting, analysis, and investigation of all beneficiary deaths.  (See 
OIGs report, A-01-16-00001.) 
 
 
Protecting the  OIG also prioritizes the health and safety of children served by HHS programs in directing 
our work toward our goal to promote health, safety, and value.  Many of HHSs programs 
Health and 
for children are operated by States and some require coordination with other agencies.  
Safety  
During this reporting period, OIGs work included the following oversight of such programs. 
of Children in 
 
HHS Programs 
OIG found that two States did not always properly handle allegations and 
referrals of abuse and neglect of children in foster care.  In audits of Texas and 
California, OIG found that neither State always ensured that allegations and referrals of 
abuse and neglect of children in the Title IV-E foster care program were recorded and 
investigated.  Further, California also did not always ensure that all such allegations and 
referrals were resolved.  (See OIGs reports on Texas, A-06-15-00049, and California, A-09-
16-01000.) 
 
OIG noted improvements in the HHS Office of Refugee Resettlements 
(ORR) coordination and outreach to protect unaccompanied alien children.  
OIG assessed HHSs progress in working with the Department of Homeland Security (DHS) 
to clarify their respective roles and responsibilities related to unaccompanied alien children 
after their release to sponsors, as OIG had recommended in 2008.  We found that HHS and 
DHS have improved coordination and that ORR has increased its contact with the children 
and their sponsors after children are released from HHS custody.  (See OIGs report, 
OEI-09-16-00260.) 
 
 
Improving  OIG has identified reducing improper payments as a departmental priority necessary to 
ensuring the long-term health of HHS programs, especially Medicare.  Highlights from this 
Financial 
semiannual reporting period include the following. 
Management  
 
and Reducing  
OIG identified more than $700 million in improper Medicare incentive 
Improper 
payments designed to promote the adoption of electronic health records 
Payments in 
(EHR).  In an audit of Medicare EHR incentive payments, OIG estimated that CMS paid 
Medicare 
$729.4 million to providers who did not meet Federal requirements for meaningful use.  
CMS also made $2.3 million in incentive payments for the wrong payment year when 
providers switched between incentive programs.  (See OIGs report, A-05-14-00047.)  
 
OIG recommended ways to improve recovery of Medicare overpayments 
identified by integrity contracts.  OIG found that although CMS had improved its 
recovery rate since 2010 (7 percent collected), only 20 percent of the $482 million in 
overpayments sought for collection based on integrity contractor referrals in 2014 were 
recouped, leaving $386 million uncollected.  OIG recommended several improvements to 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
contractors overpayment identification, collection, and tracking. (See OIGs report, OEI-03-
13-00630.) 
 
OIG found that data shortcomings may increase Medicares and 
beneficiaries costs for recalled and failed devices.  Limitations in claims data 
impede CMSs ability to readily identify and effectively track Medicares total costs related 
to the replacement of devices that were recalled or that failed prematurely.  We estimated 
these costs totaled $1.5 billion for Medicare and $140 million for beneficiaries over the 10-
year period ending on December 31, 2014, for seven recalled and prematurely failed cardiac 
devices.  By including medical device-specific information on the claim forms, CMS could 
reduce Medicare and beneficiary costs by identifying poorly performing devices more 
quickly, which could also improve beneficiaries chances of receiving appropriate followup 
care more quickly.  (See OIGs report, A-01-15-00504.) 
 
 
Overseeing   In support of OIGs goal to promote value, we assess HHS programs aimed at improving 
quality while reducing costs.  During this semiannual period, OIGs work in this area 
Programs Aimed 
included the following.  
at Improving 
 
Quality and 
OIG found that the Medicare Shared Savings Program (MSSP) shows 
Reducing  
potential to reduce spending and improve quality.  Most Accountable Care 
Costs 
Organizations (ACOs) in the MSSP were able to reduce spending and improve quality of 
care during the first 3 years of the program.  A small subset of these ACOs showed 
substantial reductions in Medicare spending for key services.  (See OIGs report, OEI-02-15-
00450.) 
 
OIG found that CMS validated hospital-reported data on quality, but 
should use additional tools to identify gaming.  CMS was validating hospital 
inpatient quality reporting data (used to adjust payments based on quality measures) 
according to the process it established in regulation, and most hospitals passed the 
validation.  However, CMS made limited use of analytics, leaving it less likely to identify 
patterns that may indicate gaming of the data by hospitals.  (See OIGs report, 
OEI-01-15-00320.) 
 
 
Protecting the  Protecting the integrity of Medicaid is another key focus area in OIGs goal to fight fraud, 
waste, and abuse.  We make recommendations to CMS and States to correct problems and 
Integrity of the 
mitigate program risks, and we work closely with State Medicaid Fraud Control Units to 
Medicaid 
combat Medicaid fraud.  Highlights of OIGs work during this reporting period include the 
Program 
following. 
 
OIG identified continued concerns about national Medicaid data.  Complete, 
accurate, and timely national data are essential for effective administration and oversight of 
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  Department of Health and Human Services Office of Inspector General 
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Medicaid; however, OIG identified continued concerns with the national Medicaid database 
known as T-MSIS.  States and CMS reported challenges to States submitting data to T-
MSIS, CMS has postponed reporting deadlines multiple times, and CMS and States 
reported concerns about the completeness and reliability of submitted data.  (See OIGs 
report, OEI-05-15-00050.) 
 
OIG found that Kentucky did not always determine Medicaid eligibility in 
accordance with Federal and State requirements.  We estimated that Kentucky 
made Federal Medicaid payments on behalf of 69,931 potentially ineligible beneficiaries 
totaling $72.8 million.  (See OIGs report, A-04-16-08047.) 
 
OIG found that challenges limit States use of Medicaid payment 
suspension.  Payment suspensions are a program integrity tool for States to stop 
Medicaid payments as early as possible when there is a credible allegation of fraud against 
a provider.  However, we found that most States imposed 10 or fewer suspensions in all of 
FY 2014, and States reported significant challenges with imposing payment suspensions.  
(See OIGs report, OEI-09-14-00020.) 
 
OIG initiated enhanced efforts to maximize the effectiveness of Medicaid 
Fraud Control Units.  MFCUs play a primary role for Medicaid in investigating and 
prosecuting provider fraud as well as patient abuse or neglect in health care facilities.  OIG 
collaborates with the MFCUs on joint cases and investigative initiatives and has oversight 
responsibility for MFCU operations.  Supporting MFCU effectiveness is one of OIGs top 
priorities.  During the semiannual reporting period, OIG piloted a new risk-based onsite 
review process, provided training for MFCU managers and staff, and partnered with 31 
MFCUs in the July 2017 national health care fraud takedown. 
 
 
Ensuring  OIG has focused significant attention on improving quality and integrity in HHS programs 
serving American Indians and Alaskan Natives (AI/AN).  This includes improving the quality 
Integrity and 
of care, management, and infrastructure of the Indian Health Service (IHS); combating fraud 
Quality in 
and misuse of funds; and ensuring adequate internal controls and training for AI/AN 
Programs 
grantees.  Highlights during this reporting period include the following.  
Serving   
American  OIG led training on quality of care, compliance, and combating fraud and 
Indians and  abuse in programs serving AI/AN.  In April 2017, OIG conducted a training program 
Alaskan Natives   for IHS and tribal officials on health care and grants management compliance in South 
Dakota.  The sessions focused on quality of care and service delivery, compliance programs 
and other tools for combating fraud and abuse, internal controls, and single audits.  
 
In audits of two tribes, OIG identified improper administration of Low-
Income Home Energy Assistance Program (LIHEAP) grant funds.  Grant funds 
totaling $1.2 million for one tribe and almost $600,000 for the other tribe were not 
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  Department of Health and Human Services Office of Inspector General 
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administered in compliance with Federal laws, regulations, and guidance.  These funds 
could have been used to provide additional benefits to eligible LIHEAP beneficiaries.  Errors 
occurred because of insufficient internal controls, and in some cases, because staff 
circumvented existing internal controls.  (See OIG reports on the Three Affiliated Tribes, A-
07-16-04230, and the Turtle Mountain Band of Chippewa Indians, A-07-16-04233.) 
 
Tribal member convicted of theft of federally provided welfare benefits, 
ordered to pay $30,000 in restitution, and debarred for 3 years.  James Leroy 
Emerson stole Temporary Assistance for Needy Families (TANF) and Supplemental 
Nutrition Assistance Program (SNAP) Tribal funds when he applied for and received benefit 
payments from the Blackfeet Tribe from 2007 through 2010, even though he was ineligible.  
He was convicted of theft of federally provided welfare benefits by fraud, Federal welfare 
assistance fraud, and theft from an Indian tribal organization, and ordered to pay $30,000 
in restitution.  Emerson was also debarred for a period of 3 years following an OIG referral 
   
to HHS.
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
OIG Participation in Congressional Hearings 
 
05/02/2017  Testimony of Christi A. Grimm, Chief of Staff,  Combating Waste, Fraud, and Abuse 
Office of Inspector General, U.S. Department  in Medicaids Personal Care Services 
of Health and Human Services  Program, House Committee on 
Energy and Commerce; Subcommittee 
on Oversight and Investigations 
 
07/18/2017  Testimony of Erin Bliss, Assistant Inspector  Examining HRSAs Oversight of the 
General for Evaluation and Inspections,  340B Drug Pricing Program, House 
Office of Inspector General, U.S. Department  Committee on Energy and Commerce; 
of Health and Human Services  Subcommittee on Oversight and 
Investigations  
 
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  Department of Health and Human Services Office of Inspector General 
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Selected Acronyms and Abbreviations  
ACA  Patient Protection and Affordable Care Act 
ACF  Administration for Children and Families 
ACL  Administration for Community Living 
ACO  Accountable Care Organizations 
AMP  average manufacturer price 
ASP  average sales price 
CDC  Centers for Disease Control and Prevention 
CIA  corporate integrity agreement 
CMP  civil monetary penalty 
CMS  Centers for Medicare & Medicaid Services 
DHS  Department of Homeland Security 
DOJ  Department of Justice 
EHR  electronic health records 
EMTALA  Emergency Medical Treatment and Labor Act 
FCA  False Claims Act 
FDA  Food and Drug Administration 
FMAP  Federal medical assistance percentage 
FPS  Fraud Prevention System 
FY  fiscal year 
GAO  Government Accountability Office 
HCBS  home- and community-based services 
HHS  Department of Health and Human Services 
HIPAA  Health Insurance Portability and Accountability Act of 1996 
HRSA  Health Resources and Services Administration 
IHS  Indian Health Service 
IT  information technology 
LIHEAP  Low-Income Home Energy Assistance Program 
MAC  Medicare Administrative Contractor 
MCO  managed care organization 
MFCU  Medicaid Fraud Control Unit 
NIH  National Institutes of Health 
OAS  Office of Audit Services 
OCIG  Office of Counsel to the Inspector General 
OEI  Office of Evaluation and Inspections 
OI  Office of Investigations 
OIG  Office of Inspector General 
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  Department of Health and Human Services Office of Inspector General 
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OMB  Office of Management and Budget 
PCS  personal care services 
PSC  Program Safeguard Contractors 
SAMHSA   Substance Abuse and Mental Health Services Administration 
SNAP  Supplemental Nutrition Assistance Program 
SNF  skilled nursing facility 
UPIC  Unified Program Integrity Contractor 
ZPIC  Zone Program Integrity Contractor 
   
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Centers for Medicare & Medicaid Services  
 
Medicare Program Reports and Reviews 
Financial Management and Improper Payments 
Enhancements Needed in the Tracking and Collection of Medicare Overpayments 
Identified by ZPICs and PSCs (OEI-03-13-00630), September 2017 
Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs) 
referred a total of $559 million in overpayments to Medicare Administrative Contractors 
(MACs) in FY 2014; however, the dollar amounts referred varied widely across ZPICs and 
PSCs.  MACs did not collect 80 percent of the $482 million they sought to collect from 
these overpayment referrals.  MACs collection rates varied, depending on the type of 
claim, with home health and hospice overpayments having a collection rate of just 
11 percent.  Furthermore, ZPICs, PSCs, and MACs continued to experience challenges in 
tracking referrals and collections of overpayments.  Because CMS began transitioning PSCs 
and ZPICs to Unified Program Integrity Contractors (UPICs) in 2016, our recommendations 
included these new contractors.        
CMS concurred with the following recommendations: 
  share best practices across ZPICs and UPICs and address challenges that hinder 
their identification of overpayments;  
  identify strategies to increase MACs collection of ZPIC- and UPIC-referred 
overpayments;  
  work with ZPICs, UPICs, and MACs to create a standard report format both for 
overpayment referral reports and overpayment collection reports; and  
  require ZPICs, UPICs, and MACs to use a unique identifier for each overpayment. 
CMS did not state whether it concurred or did not concur with our recommendation to 
implement the surety bond requirement for home health and consider the feasibility of 
requiring surety bonds for other providers based on their level of risk.   
   
Medicare Inappropriately Paid Acute-Care Hospitals for Outpatient Services They 
Provided to Beneficiaries Who Were Inpatients of Other Facilities (A-09-16-02026), 
September 2017 
Medicare did not appropriately pay acute-care hospitals any of the $51.6 million for 
outpatient services that we reviewed, and beneficiaries were held responsible for 
unnecessary deductibles and coinsurance of $14.4 million.  Generally, Medicare should not 
pay an acute-care hospital for outpatient services provided to an inpatient of another 
facility.  The services should be provided under arrangements between the two facilities, 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
and Medicare should pay the inpatient facility for all the services provided to 
the beneficiary.   
Medicare overpaid the acute-care hospitals because the system edits that should have 
prevented or detected the overpayments were not working properly.  If the system edits 
had been working properly since 2006, Medicare could have saved almost $100 million, and 
beneficiaries could have saved $28.9 million in deductibles and coinsurance. 
CMS concurred with our recommendations that it do the following: direct the Medicare 
contractors to recover the $51.6 million in identified improper payments to acute-care 
hospitals in accordance with CMSs policies and procedures; instruct the acute-care 
hospitals to refund beneficiaries up to $14.4 million in deductible and coinsurance amounts 
that may have been incorrectly collected from them or from someone on their behalf; 
identify and recover any improper payments to acute-care hospitals after our audit period; 
correct the system edits to prevent overpayments to acute-care hospitals; and instruct the 
Medicare contractors to more effectively educate acute-care hospitals not to bill Medicare 
for outpatient services they provided to beneficiaries who were inpatients of other facilities. 
 
Vulnerabilities Remain in Medicare Hospital Outlier Payments (A-07-14-02800), 
September 2017 
The summarized results of our reviews of individual Medicare contractors revealed that for 
the period of October 2003 through March 2011, Medicare contractors did not always refer 
cost reports that qualified for reconciliation, and CMS did not always ensure that Medicare 
contractors reconciled the outlier payments associated with cost reports that had been 
referred.  Our previous reviews identified 465 cost reports that qualified for reconciliation of 
outlier payments.   
CMS concurred with our recommendations that it ensure that the Medicare contractors are 
continuing to take the corrective actions that we recommended in our previous series of 
reviews and that it maintain a system that identifies and tracks all cost reports Medicare 
contractors have referred for reconciliation and that it recalculates outlier payments on the 
basis of claim submissions made by hospitals. 
CMS did not directly agree or disagree with our recommendations that it (1) determine 
whether the cost reports that had exceeded the 3-year reopening limit may be reopened 
and, if so, that it work with the Medicare contractors to reopen them, and (2) ensure that 
the Medicare contractors review all cost reports submitted since the end of the audit 
periods in our previous reviews and ensure that those whose outlier payments qualified for 
reconciliation are correctly identified, referred, and reconciled in accordance with Federal 
guidelines. 
 
Shortcomings of Device Claims Data Complicate and Potentially Increase Medicare Costs 
for Recalled and Prematurely Failed Devices (A-01-15-00504), September 2017 
15 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
We determined that the lack of medical device-specific information on the claim forms, 
along with the limited use of relevant condition codes, impedes CMSs ability to readily 
identify and effectively track Medicares total costs related to the replacement of recalled or 
prematurely failed devices.  Using claims data and other data in complex and labor-
intensive auditing procedures, we estimated that services related to the replacement of 
seven recalled and prematurely failed medical devices cost Medicare $1.5 billion and 
accrued $140 million in beneficiary copayment and deductible liabilities during calendar 
years 2005 through 2014.  By including medical device-specific information on the claim 
forms, CMS could more effectively identify and track Medicares aggregate costs related to 
recalled or prematurely failed devices.  This could help reduce Medicare costs by identifying 
poorly performing devices more quickly, which could also protect beneficiaries from 
unnecessary costs and improve their chances of receiving appropriate followup care more 
quickly. 
CMS stated that it is taking under consideration our recommendation that it continue to 
work with the Accredited Standards Committee X12 to ensure that the medical device-
specific information is included on the next version of claims forms. 
CMS concurred with our recommendation in cases where payment is impacted that it 
require hospitals to use appropriate condition codes on claims for reporting a device 
replacement procedure. 
Wisconsin Physicians Service Insurance Corporation Claimed Unallowable Medicare Part 
A Administrative Costs for Fiscal Year 2012 (A-05-15-00046), September 2017 and 
Wisconsin Physicians Service Insurance Corporation Claimed Unallowable Medicare Part 
B Administrative Costs for Fiscal Year 2012 (A-05-15-00047), September 2017 
Wisconsin Physicians Service Insurance Corporation (WPS) claimed $2.5 million in 
unallowable Medicare Part A and B administrative costs for Federal FY 2012.  CMS 
contracted with WPS, which was a Part A fiscal intermediary for selected providers in 49 
States and was a Part B carrier for Illinois, Michigan, Minnesota, and Wisconsin.  CMS 
requested that we audit WPSs Medicare final administrative cost proposal (FACP) for 
Federal FY 2012. 
WPS concurred with our findings in Parts A and B on unallowable lobbying salaries, dues, 
and donations totaling $15,874 ($7,590 in Part A and $8,284 in Part B) and provided limited 
comments on our recommendations for procedural improvements for Parts A and B. 
WPS did not concur with our recommendations for Parts A and B that it reduce its FACP by 
$2.5 million ($1.2 million in Part A and $1.3 million in Part B) related to unallowable residual 
home office expenses; employee incentive program bonuses and related Federal Insurance 
Contributions Act (FICA) taxes; and salary allocations.   
 
Fox Rehabilitation Claimed Unallowable Medicare Part B Reimbursement for Outpatient 
Therapy Services (A-02-16-01004), August 2017 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Medicare Part B covers outpatient therapy services, including occupational, physical, and 
speech therapy.  Fox Rehabilitation (Fox), headquartered in New Jersey, was among the 
largest providers of outpatient therapy services in the country from July 2013 through June 
2015.   
We estimated that Fox improperly received at least $29.9 million in Medicare 
reimbursement for services that did not comply with certain Medicare requirements.  For 85 
of the 100 claims in our random sample, Fox improperly claimed Medicare reimbursement 
for outpatient therapy services.  From our medical review, we determined that all 85 claims 
had services that were not medically necessary.  For nearly all of these claims, the amount, 
frequency, and duration of services were not reasonable and consistent with acceptable 
standards of practice.  Further, some services did not require the skills of a licensed 
therapist or were not an effective treatment for the Medicare beneficiarys condition.   
Fox disagreed with our recommendation that it refund $29.9 million to the Federal 
Government and ensure that outpatient therapy services are provided and documented in 
accordance with Medicare requirements.  
 
Medicare Paid Hundreds of Millions in Electronic Health Record Incentive Payments to 
Noncompliant Eligible Professionals (A-05-14-00047), June 2017 
As an incentive for using certified EHR technology, the Federal Government makes 
payments to eligible professionals (EPs) and hospitals that attest to the meaningful use of 
EHRs.  After reviewing a random sample of EPs who received at least one EHR incentive 
payment from May 2011 through June 2014, we estimated that CMS paid $729.4 million in 
Medicare incentive payments to EPs who did not comply with Federal meaningful-use 
requirements.  CMS also made $2.3 million in incentive payments that were made for the 
wrong payment year when EPs switched between Medicare and Medicaid incentive 
programs.   
CMS concurred with our recommendations that it recover payments made to the sampled 
EPs who did not comply with meaningful-use requirements, educate EPs on documentation 
requirements, recover $2.3 million made to EPs after they switched programs, and use 
computer edits to ensure that an EP does not receive payments under both EHR incentive 
programs for the same program year.  
CMS partially concurred with our recommendations that it review incentive payments to 
determine which EPs did not meet meaningful-use measures for each applicable program 
year to attempt recovery of the $729.4 million, and that it review a random sample of EPs 
documentation supporting their self-attestations to identify inappropriate incentive 
payments that may have been made after the audit period. 
 
17 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Quality of Care, Safety, and Access 
A Few States Fell Short in Timely Investigation of the Most Serious Nursing Home 
Complaints: 20112015 (OEI-01-16-00330), September 2017 
We found that nursing home complaints rose by one-third across States from 2011 to 2015.  
During the period we reviewed, States conducted nearly all the required onsite 
investigations for the two most serious levels of complaints.  Although almost all States 
conducted most of their onsite investigations within required timeframes, a few States fell 
short.  This data brief raises questions about how some States respond to complaints, as 
these responses could have serious consequences for nursing home residents in those 
States.  To ensure the health and safety of nursing home residents, CMS must remain 
vigilant and assist the States that are falling short in meeting timeframes for investigations 
of complaints.  
 
Early Alert: The Centers for Medicare & Medicaid Services Has Inadequate Procedures To 
Ensure That Incidents of Potential Abuse or Neglect at Skilled Nursing Facilities Are 
Identified and Reported in Accordance with Applicable Requirements (A-01-17-00504), 
August 2017 
This memorandum alerted CMS to the preliminary results of our ongoing review of 
potential abuse or neglect of Medicare beneficiaries in SNFs.  This audit is part of OIGs 
ongoing efforts to detect and combat elder abuse.  We communicated these preliminary 
results because of the importance of detecting and combating elder abuse.   
We identified 134 Medicare beneficiaries whose injuries may have been the result of abuse 
or neglect that occurred from January 1, 2015, through December 31, 2016.  We also found 
that a significant percentage of these incidents may not have been reported to law 
enforcement.  As a result, we determined that CMS has inadequate procedures to ensure 
that incidents of potential abuse or neglect of Medicare beneficiaries residing in SNFs are 
identified and reported.  Accordingly, this Early Alert contained suggestions for immediate 
actions that CMS could take to ensure better protection of vulnerable beneficiaries. 
Opioids in Medicare Part D:  Concerns about Extreme Use and Questionable Prescribing 
(OEI-02-17-00250), July 2017   
We found that one out of every three beneficiaries received a prescription opioid through 
Medicare Part D in 2016.  Half a million beneficiaries received high amounts of opioids 
during the year; of these, almost 90,000 beneficiaries were at serious risk of opioid misuse 
or overdose.  These 90,000 beneficiaries either received extreme amounts of opioids or 
appeared to be doctor shopping.  Moreover, 401 prescribers had questionable 
prescribing patterns for beneficiaries who are at serious risk.  Ensuring the appropriate use 
and prescribing of opioids is essential to protecting the health and safety of beneficiaries 
and the integrity of Part D.  OIG is committed to continuing investigations and evaluations 
to address this issue.  In addition, we call on Part D sponsors to work with OIG and CMS to 
further improve efforts to combat opioid abuse and misuse in Medicare.   
18 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
 
Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2017 (OEI-05-
17-00160), June 2017 
Overall, we found that the rate of Part D plan formularies inclusion of the drugs commonly 
used by dual eligibles (i.e., individuals who are eligible for both Medicare and Medicaid) is 
high, with some variation.  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.  This report 
did not make recommendations. 
 
Round 2 Competitive Bidding for CPAP/RAD: Disrupted Access Unlikely for Devices, 
Inconclusive for Supplies (OEI-01-15-00040), June 2017 
We found that Medicare payments for continuous positive airway pressure (CPAP) devices 
and respiratory assist devices (RADs) continued after the July 2013 implementation of 
Round 2 of the Competitive Bidding Program for almost all beneficiaries in both Round 2 
bidding areas and non-bidding areas.  Although payments for supplies declined more in 
Round 2 bidding areas, the decline may not indicate disruptions in beneficiaries receiving 
needed supplies.  For example, the decline may indicate that the program reduced the 
provision of unnecessary supplies, as CMS determined to be the case with Round 1 of the 
program.     
This report was the first in a series of three examining the effect of Round 2 Competitive 
Bidding on Medicare beneficiary access to durable medical equipment.  Subsequent 
reports will examine beneficiary access to enteral nutrition supplies and oxygen equipment 
and supplies. 
Program Integrity 
The Centers for Medicare & Medicaid Services Could Improve Performance Measures 
Associated with the Fraud Prevention System (A-01-15-00509), September 2017 
The Fraud Prevention System (FPS), which was developed to meet a requirement in the 
Small Business Jobs Act of 2010, uses models that predict suspicious behavior to identify 
and prevent the payment of improper Medicare claims.  When performing work to certify 
the actual and projected savings and the return on investment related to HHSs use of the 
FPS, we became aware that HHS might not have the capability to trace the savings from 
administrative actions back to the specific FPS model that generated the savings.  CMS 
could not track those savings because, according to CMS, that capability was not built into 
the FPS.  In addition, CMS did not make use of all pertinent performance results because 
CMS did not ensure that the contractors adjusted savings reported to CMS reflected the 
amounts certified by OIG, and CMS did not evaluate FPS model performance on the basis 
of the amounts actually expected to be prevented or recovered.  As a result, the FPS is not 
as effective as it could be in preventing fraud, waste, and abuse in Medicare. 
19 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
CMS concurred with our recommendations that it make better use of its performance 
results to refine and enhance the predictive-analytics technologies of the FPS models by 
ensuring that the redesigned FPS is effective in allowing CMS to track savings from 
administrative actions back to individual FPS models, ensuring that contractors adjust 
savings reported to CMS to reflect only FPS-related savings amounts, and ensuring that 
evaluations of FPS model performance consider not only the identified savings but also the 
adjusted savings.   
 
CMS Validated Hospital Inpatient Quality Reporting Program Data, But Should Use 
Additional Tools to Identify Gaming (OEI-01-15-00320), April 2017 
For payment year 2016, CMS met its regulatory requirement by validating sufficient hospital 
inpatient quality reporting program data, which are used to adjust payments based on 
quality.  However, CMS made limited use of analytics, which can help identify gaming of 
quality data.  CMS concurred with our recommendation to make better use of analytics to 
ensure the integrity of hospital-reported quality data and the resulting payment 
adjustments. 
 
Payment Policy and Trends 
Medicare Payments for Clinical Diagnostic Laboratory Tests in 2016: Year 3 of Baseline 
Data (OEI-09-17-00140), September 2017 
Medicare paid $6.8 billion under Part B for clinical diagnostic laboratory tests (lab tests) in 
2016, a total that changed very little in the 3-year period from 2014 through 2016.  The top 
25 tests by Medicare payments totaled $4.3 billion and represented 63 percent of all 
Medicare payments for lab tests in 2016.  More than half of payments for the top 25 tests 
went to 1 percent of labs. 
As part of legislation reforming Medicares payment rates for lab tests under Part B, 
Congress mandated that OIG monitor Medicare payments for lab tests and publicly release 
an annual analysis of the top 25 lab tests by Medicare payments.  Changes in the Medicare 
payment rates for these 25 tests could have a significant impact on overall Medicare 
spending for lab tests when the new payment system for lab tests goes into effect in 2018.  
Our data brief contained no recommendations. 
 
Medicare Shared Savings Program: Accountable Care Organizations Have Shown 
Potential for Reducing Spending and Improving Quality (OEI-02-15-00450), August 2017 
The Medicare Shared Savings Program is one of the largest alternative payment models in 
Medicare that reward providers for the quality and value of services.  Over the first 3 years 
of the program, most ACOs in the Medicare Shared Savings Program reduced Medicare 
spending compared to their benchmarks, achieving a net spending reduction (i.e., total 
reduced spending minus total increased spending) of nearly $1 billion.  At the same time, 
ACOs generally improved the quality of care they provided, according to an analysis of 
20 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
CMS data on quality measures.  Further, our analysis of CMS data for the first 3 years 
revealed that a small subset of high-performing ACOs showed substantial reductions in 
Medicare spending while providing high-quality care, as compared to other Shared Savings 
Program ACOs and the national average for fee-for-service providers. 
 
Medicare Market Shares of Mail-Order Diabetes Test Strips From October Through 
December 2016 (OEI-04-16-00473), June 2017 
We found that from October through December 2016, sampled suppliers provided 19 types 
of diabetes test strips via the Medicare National Mail-Order program.  The top 2 strip types 
accounted for 53 percent of the Medicare mail-order market, and the top 10 strip types 
accounted for 97.5 percent.   
This was the third of three OIG reports addressing the Medicare market shares of diabetes 
test strips in 2016.  This report provides additional information on the market shares of 
types of diabetes test strips provided by Medicare from October through December 2016.  
CMS will use the results from the second OIG report (OEI-04-16-00471, February 2017) to 
determine bidders adherence with the MIPPA 50-percent rule for the next round of 
competitive bidding.  (The Medicare Improvements for Patients and Providers Act (MIPPA) 
prohibits CMS from awarding a contract to a supplier of diabetes test strips if the suppliers 
bid does not cover at least 50 percent, by volume, of all types of diabetes test strips on the 
market.)  Contracts for the current round of the National Mail-Order program began on 
July 1, 2016, and expire on December 31, 2018.  
 
Medicare Could Save Millions by Eliminating the Lump Sum Purchase Option for All 
Power Mobility Devices (A-05-15-00020), May 2017 
Medicare Part B covers power mobility devices, which include power-operated vehicles and 
standard and complex power wheelchairs.  Effective January 1, 2011, the Affordable Care Act 
(ACA) eliminated the lump-sum purchase option for standard rehabilitative power 
wheelchairs, requiring suppliers to provide these devices on a monthly rental basis.  From 
2011 through 2014, Medicare saved up to an estimated $86 million by eliminating the lump-
sum purchase option for standard power wheelchairs.  However, the lump-sum purchase 
option remained available for nonstandard power mobility devicesi.e., power-operated 
vehicles and complex power wheelchairs.  
Medicare could save millions by eliminating the lump-sum purchase option for all power 
mobility devices and requiring that all power mobility devices be provided to beneficiaries 
on a monthly rental basis.  Medicare could have saved an additional $10,245,539 from 
calendar years 2011 through 2014 if it had eliminated the lump-sum payment option for all 
power mobility devices. 
CMS stated it would consider our recommendation that it seek legislation to eliminate the 
lump-sum payment option for all power mobility devices.   
21 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Drug Pricing and Reimbursement 
CMS and Its Claims Processing Contractors Issued Conflicting Guidance on the Proper 
Use of the KX Modifier for Part B Immunosuppressive Drug Claims (A-06-15-00018), 
August 2017 
Medicare Part B covers immunosuppressive drugs for beneficiaries who receive an organ 
transplant for which Medicare payment has been made.  A record of fee-for-service 
transplant claims should be retained in the beneficiarys claims history.  When Medicare 
cannot locate a fee-for-service claim in a beneficiarys history, a pharmacy can submit a 
claim for an immunosuppressive drug with a KX modifier to indicate that it has records 
showing that the beneficiary is eligible for Medicare coverage.  In FY 2014, Part B paid 
almost $353 million for immunosuppressive drugs and nearly 100 percent of the claims 
were submitted with the KX modifier.  CMS intended the KX modifier to signify that the 
pharmacy had documentation proving that a beneficiarys organ transplant occurred when 
the beneficiary was eligible for Medicare coverage.  However, CMS guidance is not clearly 
written and the guidance issued by claims processing contractors conflicted with CMS 
guidelines by indicating that claims without the KX modifier would be denied. 
Part B paid for some immunosuppressive drugs billed with the KX modifier that were not 
eligible for Part B payment.  Of the 75 claims in our random sample, pharmacies did not 
have documentation to support the KX modifier for 10 claims.  On the basis of our sample 
results, we estimated that Part B paid $4.6 million in reimbursement for immunosuppressive 
drugs billed with the KX modifier that did not comply with Medicare requirements.  
CMS concurred with our recommendation that it clarify language in its guidance and 
instruct the claims processing contractors to process immunosuppressive drug claims 
without the KX modifier and educate pharmacies on the correct use of the modifier.  
 
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2015 Average 
Sales Prices (OEI-03-17-00360), September 2017 
OIG is required to compare the average sales price (ASP) with the average 
manufacturer price (AMP) of drugs reimbursed under Medicare Part B.  If OIG finds 
that the ASP for a drug exceeds the AMP by a certain percentage, CMS can substitute 
the ASP-based amount with the lower rate.  In response to data provided by OIG, CMS 
lowered Part B reimbursement for 13 drugs, saving Medicare and its beneficiaries 
$5.4 million over 1 year based on 2015 data.  This finding highlights the success of 
OIGs mandated quarterly comparisons of average sales prices with AMPs and 
implementation of CMSs current price-substitution policy.  OIG continues to 
recommend that CMS expand the price-substitution criteria.  CMS did not concur with 
this recommendation to expand the price-substitution policy and believes that more 
experience with this policy is needed before it can be expanded.   
 
Calculation of Potential Inflation Indexed Rebates for Medicare Part B Drugs (OEI-12-17-
00180), August 2017 
22 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
In response to a congressional request, OIG found that if Medicare Part B were to 
implement a prescription drug rebate program similar to Medicaids, it could have resulted 
in at least $1.4 billion in rebates in 2015 for Part B drugs when prices increased faster than 
inflation.  Any consideration of a rebate program should address several administrative 
issues that may hinder rebate collections.  This report had no recommendations. 
 
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2014 Average 
Sales Prices (OEI-03-16-00540), August 2017 
OIG is required to compare the ASP with the AMP of drugs reimbursed under Medicare 
Part B.  If OIG finds that the ASP for a drug exceeds the AMP by a certain percentage, CMS 
can substitute the ASP-based amount with a lower rate.  In response to data provided by 
OIG, CMS lowered Part B reimbursement for 14 drugs, saving Medicare and its beneficiaries 
$24 million over 1 year based on 2014 data.  This finding highlights the success of OIGs 
mandated quarterly comparisons of ASPs with AMPs and implementation of CMSs current 
price-substitution policy.  OIG continues to recommend that CMS expand the price-
substitution criteria.  CMS did not concur with this recommendation to expand the price-
substitution policy and believes that more experience with this policy is needed before it 
can be expanded.   
 
   
23 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Medicaid Program Reports and Reviews  
Financial Management and Improper Payments 
Arkansas Did Not Make Supplemental Payments in Accordance with Federal 
Requirements (A-06-15-00042), September 2017 
To encourage primary care providers to participate in Medicaid, the ACA required States to 
pay increased Medicaid payments (supplemental payments) to eligible providers in 
calendar years 2013 and 2014.  The States received a Federal matching rate of 100 percent 
for any supplemental payment.   
Arkansas did not always make the supplemental Medicaid payments in accordance with 
Federal requirements.  Of the 120 supplemental payments in our stratified random sample, 
88 were incorrectly calculated, made to ineligible providers, or both.  We estimated that 
Arkansas improperly received at least $7.1 million in additional Federal share, of which we 
recommended recovery of approximately $3 million.   
Arkansas concurred with our findings, which were the basis of our recommendation that it 
refund approximately $3 million to the Federal Government for the Federal share 
associated with the inappropriate supplemental payments. 
 
Texas Improperly Received Medicaid Reimbursement for School Based Health Service (A-
06-14-00002), August 2017 
 
To ascertain the portion of time and activities of a school-based health program that is 
related to the provision of Medicaid services, States may develop an allocation 
methodology that is approved by CMS.  Random moment sampling, which makes use of 
random moment time studies, is an approved allocation methodology and must reflect all 
of the time used and activities performed by employees participating in a school-based 
health program.  Not all of the direct medical service costs that the State agency claimed 
for Medicaid School Health and Related Services (SHARS) were reasonable, adequately 
supported, and otherwise allowable in accordance with applicable Federal and State 
requirements.  Of the 3,161 random moments we reviewed, 274 were coded incorrectly.  As 
a result of these errors, Texas received $18.9 million in unallowable Federal reimbursement 
for the Medicaid SHARS program from October 2010 through September 2011. 
Additionally, Texass random moment sampling did not include all eligible sample moments 
in the random moment time studies.  Also, we were unable to reproduce the sampling 
process or verify that Texas and the contractor did not make any unallowable changes to 
the sample.  Thus, we are unable to verify whether the sample was valid. 
Texas neither agreed nor disagreed with our recommendations that it refund the $18.9 
million Federal share of unallowable reimbursement that was claimed for the Medicaid 
SHARS program. 
New York State Improperly Claimed Medicaid Reimbursement for Some Managed Long 
Term Care Payments (A-02-15-01026), August 2017 
24 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Medicaid Managed Long-Term Care (MLTC) plans under contract with New York receive 
fixed monthly payments to provide services to Medicaid beneficiaries who are chronically ill 
or disabled and who wish to stay in their homes and communities.  In return, the plans 
agree to the terms of New Yorks MLTC contract, which was approved by CMS.   
New York improperly claimed reimbursement for 36 of 100 payments made to MLTC plans 
that we reviewed.  New York did not ensure that MLTC plans documented eligibility 
assessments of program applicants and reassessments of those already in the program or 
conducted these assessments in a timely manner.  New York also did not ensure that the 
plans provided services to beneficiaries according to a written care plan or that the plans 
enrolled and retained only those beneficiaries who required community-based services and 
disenrolled beneficiaries in a timely manner.  In addition, for 71 beneficiaries associated with 
the payments we reviewed, the beneficiaries MLTC plans did not comply with New Yorks 
contract requirements for service planning and care management.  As a result, there could 
have been health and safety risks to these beneficiaries.   
New York did not concur or nonconcur with our recommendations that it (1) develop 
procedures to monitor MLTC plans for compliance with requirements in its contract and (2) 
ensure that future contracts include provisions that allow it to recover payments when 
plans do not comply with contract requirements.  This measure could have saved Medicaid 
$1.4 billion ($717 million Federal share) during our 1-year audit period. 
 
New Jersey Claimed Medicaid Reimbursement for Adult Partial Hospitalization Services 
That Did Not Comply with Federal and State Requirements (A-02-14-01015), April 2017 
We identified a significant number of services provided by New Jersey on an outpatient 
basis to adults with mental illnesses, known as partial hospitalization services, that were 
improperly submitted for Federal Medicaid reimbursement.   
New Jersey claimed at least $30.7 million in Federal Medicaid reimbursement over 4 years 
for adult partial hospitalization services that were unallowable.  Of the 100 New Jersey 
claims for reimbursement for these services that we sampled, all 100 did not comply with 
Federal and State requirements, and 92 contained more than 1 deficiency.  We estimated 
that New Jersey improperly claimed at least $30.7 million in Medicaid reimbursement for 
these services. 
New Jersey did not concur or nonconcur with our recommendations that it ensure that 
partial hospitalization services are provided by appropriately licensed hospitals, issue 
guidance to providers on requirements for claiming Medicaid reimbursement for partial 
hospitalization services, improve its monitoring of partial hospitalization services providers, 
review and revise payment controls to ensure the correct rates are paid for partial 
hospitalization services, and work with CMS to identify claims outside of our audit period 
that were paid at an incorrect rate or for services that were not provided by an appropriate 
facility. 
CMS did not concur with our recommendation that it refund $30.7 million.  
 
25 
  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
Ohios and Michigans Sales and Use Taxes of Medicaid Managed Care Organization 
Services Do Not Meet Broad Based Requirement (A-03-16-00200), April 2017 
In 2016, Ohio and Michigan did not meet Federal requirements that taxes on Medicaid 
managed care organizations (MCOs) be broad-based.  Specifically, they continued to tax 
only Medicaid MCOs under their sales and use tax programs.  Ohio stated that it would 
work with CMS to address changes that might need to be made to its tax.   
Our review covered eight States (California, Georgia, Kentucky, Michigan, Missouri, Ohio, 
Oregon, and Pennsylvania) that the National Conference of State Legislatures identified as 
continuing to tax only Medicaid MCOs as of June 2009.  Two StatesCalifornia and 
Pennsylvaniaimplemented new MCO tax programs effective July 1, 2016, to conform to 
the Deficit Reduction Act.  Four States (Georgia, Kentucky, Missouri, and Oregon) 
discontinued collecting their Medicaid MCO-only tax on September 30, 2009, to conform 
to the Deficit Reduction Act.  CMS granted Ohio a waiver that would bring Ohios proposed 
MCO tax into compliance and became effective on July 1, 2017.  Michigan discontinued its 
tax on December 31, 2016, as scheduled, and is now also in compliance.   
CMS concurred with our recommendation that it monitor Ohios and Michigans use of 
revenues from their sales and use tax on Medicaid MCOs as part of the State share of 
Medicaid program expenditures after December 31, 2016, and verify that they conform to 
Federal requirements that such taxes be broad-based.   
 
California Incorrectly Claimed Additional Medicaid Funding Authorized Under the Recovery 
Act When Reclaiming Overpayments Made to Bankrupt or Out of Business Providers (A-09-
14-02030), April 2017 
States are required to refund to the Federal Government the Federal share of a Medicaid 
overpayment at the end of the 1-year period following the date the overpayment is 
identified.  If a State determines that the overpayment is uncollectable because the 
provider is bankrupt or out of business, the State is allowed to reclaim the Federal share of 
the overpayment. 
 
For FYs 2010 through 2013, California claimed $58.3 million in Federal reimbursement for 
Medicaid uncollectable overpayments.  We reviewed California because the Federal 
reimbursement it claimed for uncollectible overpayments during this period represented 
approximately 70 percent of the total nation-wide. 
 
California incorrectly used Federal medical assistance percentages (FMAPs) increased by 
the American Recovery and Reinvestment Act (Recovery Act) to claim additional Federal 
reimbursement of almost $6.6 million for 250 uncollectible overpayments that were not 
originally made during the recession adjustment period or were not previously refunded to 
the Federal Government using the increased FMAPs. 
 
California agreed with our recommendations that it refund almost $6.6 million to the 
Federal Government and ensure that it uses the FMAPs in effect when the original 
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overpayments were made and refunded when claiming Federal reimbursement for 
uncollectible overpayments.  
 
Medical Loss Ratio  
Private health insurers, Medicare Advantage plans, and Medicare Part D sponsors are 
required to spend a fixed percentage of premium dollars to provide medical services and 
health quality improvement activities.  This percentage is known as a medical loss ratio 
(MLR).   
Review of Wisconsin Medicaid Managed Care Program Potential Savings With Minimum 
Medical Loss Ratio (A-05-15-00040), June 2017, and 
Review of Pennsylvania Medicaid Managed Care Program Potential Savings With 
Minimum Medical Loss Ratio (A-03-15-00203), July 2017 
These two reports are part of a series of reviews that OIG conducted to determine whether 
Medicaid could achieve savings if States required Medicaid MCOs to meet a minimum MLR 
standard and pay remittances if the MLR standard were not met. 
 
In 2014, Wisconsin could have saved $16.2 million ($9.6 million Federal share) and 
Pennsylvania could have saved between $8 million ($4.3 million Federal share) on a 
contract and grant basis and $81.4 million ($42.3 million Federal share) on a rating category 
basis if the two States (1) required their Medicaid managed care plans to meet the 
minimum MLR standard similar to the Federal standards for other plans and (2) required 
remittances when Medicaid managed care plans did not meet the MLR standard.   
 
Of the 11 managed care plans we reviewed in Wisconsin, 4 plans had MLRs that were less 
than 85 percent (the minimum MLR standard for large private insurers) during 2014.  Of the 
27 contracts and grants that we reviewed in Pennsylvania, 6 had MLRs that were less than 
85 percent during 2014.  After our reviews but before the issuance of our reports, CMS 
published a final rule requiring Medicaid MCOs to achieve a minimum MLR for rate-setting 
purposes.   
 
Wisconsin and Pennsylvania agreed with our recommendations that they incorporate into 
their contracts with Medicaid MCOs the MLR standards adopted in the CMS final rule and 
consider implementing into their Medicaid MCO contracts a remittance requirement if 
appropriate.   
Quality of Care, Safety, and Access 
Maine Did Not Comply with Federal and State Requirements for Critical Incidents 
Involving Medicaid Beneficiaries with Developmental Disabilities (A-01-16-00001), August 
2017 
Maine did not comply with Federal Medicaid waiver requirements and State requirements 
for reporting and monitoring critical incidents involving Medicaid beneficiaries with 
developmental disabilities.  Maine did not ensure that community-based providers 
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reported all critical incidents to Maine; did not ensure that community-based providers 
conducted administrative reviews of all critical incidents involving serious injuries, 
dangerous situations, or suicidal acts and submitted their findings within 30 days; did not 
appropriately report all restraint usage and rights violations; did not review and analyze 
data on all critical incidents; did not investigate and report immediately to the appropriate 
office all critical incidents involving suspected abuse, neglect, or exploitation; and did not 
ensure that all beneficiary deaths were appropriately reported, analyzed, investigated, and 
reported to the appropriate office. 
 
Maine failed to demonstrate that it has a system to ensure the health, welfare, and safety of 
the 2,640 Medicaid beneficiaries with developmental disabilities covered by the Medicaid 
waiver program. 
 
Maine agreed or partially agreed with all our recommendations that it fully implement its 
regulations regarding the reporting and monitoring of critical incidents to fulfill the 
participant safeguard assurances it provided in its Medicaid waiver and help protect 
 
Medicaid beneficiaries from harm.
Program Integrity 
Challenges Appear To Limit States Use of Medicaid Payment Suspensions (OEI-09-14-
 
00020), September 2017  
When State Medicaid agencies determine an allegation of fraud against a provider is 
credible, they are required to suspend payments for health care items and services, unless 
good cause exists not to suspend payments.  Most State Medicaid agencies (41 of 56) 
reported imposing 10 or fewer payment suspensions in FY 2014. Medicaid agencies 
reported significant challenges related to imposing payment suspensions, which appear to 
have limited States use of this program integrity tool.  CMS concurred with our 
recommendation to provide additional technical assistance to help Medicaid agencies fully 
utilize Medicaid payment suspensions as a program integrity tool.   
 
T-MSIS Data Not Yet Available for Overseeing Medicaid (OEI-05-15-00050), June 2017 
OIGs most recent review of the Transformed Medicaid Statistical Information System (T-
MSIS) continues to identify concerns with T-MSIS data.  Medicaid data are vital for the 
effective administration and oversight of the Medicaid program by States and the Federal 
Government, but problems with Medicaid data have hindered program integrity, research, 
budgeting, and policy. 
After failing to meet the implementation deadline of January 2014, CMS and States 
reported that technological problems and competing priorities caused further delays with 
T-MSIS.  Most recently, CMS indicated that it expects that all States will be reporting to 
T-MSIS by the end of 2017.  As of December 2016, 21 States were submitting data. 
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As States and CMS work together to enter data into T-MSIS, they continue to raise 
concerns about the completeness and reliability of the data.  Because of CMSs history of 
delaying target dates for implementation, OIG is concerned that CMS and States will delay 
further rather than address these outstanding challenges.  OIG continues to support our 
2013 recommendation that CMS establish a deadline for when T-MSIS data will be available 
for program analysis and other management functions.  Without a fixed deadline, some 
States and CMS may not make T-MSIS a management priority. 
 
Florida Did Not Suspend Medicaid Payments for Some Cases With Credible Fraud 
Allegations in Accordance with the Affordable Care Act (A-04-14-07046), April 2017 
Florida did not always suspend Medicaid payments to providers that had credible fraud 
allegation cases in accordance with legal requirements.  Of the 95 cases that we reviewed, 
Florida did not suspend Medicaid payments for 54 cases.  For four cases, investigations into 
credible allegations of fraud were ongoing, but Florida did not suspend Medicaid 
payments.  As such, the Federal share ($8 million) of these payments was not eligible for 
Federal reimbursement.  For one case with a completed investigation that resulted in a civil 
settlement, Florida did not provide documentation to support that it returned the Federal 
share of $236,544 to the Federal Government.  For 49 cases for which investigations were 
complete, Florida had not suspended Medicaid payments totaling $40 million (Federal 
share) when the fraud investigations were pending.   
Florida did not concur with our recommendations that it refund $8 million to the Federal 
Government and update its policies and procedures to ensure that it suspends Medicaid 
payments to providers with credible allegations of fraud, which could have prevented $40 
million (Federal share) from being at risk. 
Florida partially concurred with our recommendation that it refund $236,544 to the Federal 
Government related to one case for which Florida did not provide documentation to 
support that it returned the Federal share to the Federal Government. 
Payment Policy and Trends 
Medicaid Eligibility Determinations 
The ACA gave States the option to expand Medicaid coverage to low-income adults 
without dependent children and established a higher Federal reimbursement rate (FMAP) 
for services provided to these newly eligible beneficiaries.  We examined whether Kentucky 
was determining Medicaid eligibility for all its beneficiaries in accordance with Federal and 
State requirements. 
Kentucky Did Not Correctly Determine Medicaid Eligibility for Some Newly Enrolled 
Beneficiaries (A-04-15-08044), May 2017, and  
Kentucky Did Not Always Perform Medicaid Eligibility Determinations for Non-Newly 
Eligible Beneficiaries in Accordance with State and Federal Requirements (A-04-16-
08047), August 2017 
Of our sample of 120 newly enrolled beneficiaries, Kentucky did not determine the eligibility 
for 9 in accordance with Federal and State requirements.  For our sample of 120 non-newly 
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enrolled beneficiaries, Kentucky did not determine the eligibility in accordance with 
requirements for 7.  Kentucky did not always electronically or manually verify income and 
citizenship or keep documentation of that verification.  And although it did not violate an 
eligibility requirement, Kentucky did not perform, or maintain documentation of, identity-
proofing for 40 newly enrolled beneficiaries or 13 non-newly enrolled beneficiaries in 
accordance with Federal requirements.  The Federal identity-proofing requirements are 
intended to reduce the potential for identity theft. 
Kentucky made Federal Medicaid payments on behalf of 34,593 potentially ineligible newly 
enrolled beneficiaries totaling $105 million.  Kentucky made Federal Medicaid payments on 
behalf of 69,931 potentially ineligible non-newly enrolled beneficiaries totaling $72.8 
million.  We did not include the identity-proofing errors in our estimate of potentially 
ineligible beneficiaries and payments, but we are highlighting the potential for identity theft 
if Kentucky does not correct these errors. 
 
Kentucky agreed with our recommendation in both reports that it redetermine, if necessary, 
the current Medicaid eligibility status of the sample beneficiaries for whom income or 
citizenship verifications did not meet Federal and State requirements.  For the newly 
enrolled beneficiaries, Kentucky also agreed with our recommendations that it ensure that 
the enrollment system used to determine eligibility verifies income and citizenship data 
using available electronic data sources and ensure that the enrollment system used verifies 
applicants identity and maintains identity-proofing documentation.  
 
Drug Pricing and Reimbursement 
Previous OIG reviews found that States did not always bill and collect all rebates due for 
drugs administered by physicians to enrollees of Medicaid MCOs.  For pharmacy and 
physician-administered drugs, Washington did not bill for and collect from manufacturers 
rebates of $34.1 million ($17 million Federal share), and Hawaii did not bill for and collect 
from manufacturers rebates of $18.8 million ($9.7 million Federal share).   
Washington State Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to 
Enrollees of Medicaid Managed-Care Organizations (A-09-16-02028), September 2017 
 
Hawaii Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to Enrollees of 
Medicaid Managed-Care Organizations (A-09-16-02029), September 2017 
Washington and Hawaii concurred or partially concurred with our recommendations that 
they bill for and collect from manufacturers rebates for pharmacy drugs and refund $34.1 
million (Washington) and $18.8 million (Hawaii); work with CMS to determine the amount of 
any rebates due for the 17,140 claim lines that we set aside (Washington) or whether the 
other physician-administered drugs were eligible for rebates and, if so, determine the 
rebates due (Hawaii); and improve oversight of the processes for determining drug rebate 
eligibility (Washington) and rebate billing and collection (Hawaii) to ensure that MCOs 
submit valid and complete drug utilization data for pharmacy and p hysician-administered 
drugs dispensed to MCO enrollees.   
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Legal and Investigative Activities Related to the 
Medicare and Medicaid Programs  
OIG investigates allegations of fraud, waste, and abuse in all HHS programs.  Our largest 
body of work involves investigating matters related to the Medicare and Medicaid 
programs, such as patient harm; billing for services not rendered, medically unnecessary 
services, or upcoded services (i.e., services billed for at a level higher than warranted); illegal 
billing, sale, and diversion of prescription drugs; the marketing of off-label uses for 
prescription drugs; and solicitation and receipt of kickbacks, including illegal payments to 
patients for involvement in fraud schemes and illegal referral arrangements between 
physicians and medical companies.   
 
Specific case types include fraud schemes related to:  
 
  controlled and noncontrolled prescription drugs,  
  home health agencies and personal care services,  
  ambulance transportation,  
  durable medical equipment, and  
  diagnostic radiology and laboratory testing.   
 
OIG also conducts investigations regarding organized criminal activity, including medical 
identity theft and fraudulent medical schemes established for the sole purpose of stealing 
Medicare dollars.  Investigators are opening an increasing number of cases against health 
care providers and patients who engage in these health care fraud schemes.  Those who 
participate in the schemes may face heavy fines, jail time, and exclusion from participation 
in Federal health care programs.   
 
In addition to investigating Medicare and Medicaid fraud, OIG investigates fraud, waste, 
and abuse in other HHS programs, including ACF, IHS, the Health Resources and Services 
Administration (HRSA), and ACL.  OIG investigates potential misuse of grants and contract 
funds awarded by CDC, NIH, the Substance Abuse and Mental Health Services 
Administration (SAMHSA), and other HHS agencies.  Under certain circumstances, OIG 
investigates noncustodial parents who fail to pay court-ordered child support.  OIG also 
investigates allegations of employee misconduct, whistleblower reprisals, and wrongdoing 
by HHS agency officials.   
 
One of the most common types of fraud perpetrated against Medicare, Medicaid, and 
other Federal health care programs involves filing false claims for reimbursement.  False 
claims may be pursued under Federal and State criminal statutes and, when appropriate, 
under the FCA.  Depending on the types of fraud or other violations involved, OIG 
investigations may culminate in criminal or civil court judgments and decisions, 
administrative sanctions and decisions, and/or negotiated settlement agreements.  
Investigative outcomes take many forms, including incarceration, restitution, fines, 
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penalties, forfeitures, assessments, and exclusion of individuals or entities from participation 
in all Federal health care programs.  Frequently used exclusion and penalty authorities are 
described on our website at http://oig.hhs.gov/fraud/enforcement/cmp/. 
 
During this semiannual reporting period, we reported 373 criminal and 360 civil actions 
against individuals or entities that engaged in offenses related to health care.  We also 
reported over $1.62 billion in investigative receivables due to HHS and more than $422.4 
million in non-HHS investigative receivables, including civil and administrative settlements 
or civil judgments related to Medicare, Medicaid, and other Federal, State, and private 
health care programs.   
 
The following are recently completed actions and settlements organized by subject area. 
 
Prescription Drugs 
New YorkLeopoldo Tejada and his codefendants conducted a scheme to defraud 
Medicaid, Medicare, and the New York State-funded AIDS Drug Assistance Program 
(ADAP) through the purchase and sale of illegally diverted prescription drugs.  Specifically, 
from 2006 through August 2013 the defendants purchased prescription drugs, including 
high-cost medications used to treat HIV, that were obtained from patients who sold the 
drugs rather than use them to treat their illnesses.  The drugs were then repackaged and 
resold to their customers, as if they were new drugs obtained from legitimate sources.  The 
defendants requested and received reimbursement from Medicaid, Medicare, and ADAP in 
connection with these sales, even though these programs would not have been willing to 
reimburse the cost of secondhand drugs. 
 
Tejada pleaded guilty to conspiracy to commit wire and health care fraud and was ordered 
to pay $7.5 million in restitution, joint and several.  Two defendants involved in the scheme 
were previously sentenced to a combined 3 years and 1 month in prison and ordered to 
pay $7.5 million restitution, joint and several.  To date, four codefendants have been 
excluded from participation in Federal health care programs for a combined 102 years. 
 
MichiganThree co-conspirators connected with the health care provider Compassionate 
Doctors, PC, were convicted of charges resulting from their involvement in an unlawful 
prescription drug operation.  In all, they were sentenced to a combined 46 years and 4 
months in prison, and ordered to pay $10.7 million in restitution. 
 
The defendantsCompassionate Doctors, PC, owner Sardar Ashrafkhan; Dr. Adelfo 
Pamatmat; and pharmacist Nadeem Iqbalconspired to operate a fraudulent medical 
practice and pharmacy.  Compassionate Doctors, PC, purported to be a visiting physicians 
practice; however, the actual scheme involved patient marketers bringing paid patients to 
residences to obtain fraudulent prescriptions for controlled substances.  Medicare was 
billed for medical examinations and tests that were not conducted properly or were never 
conducted at all.  At the cooperating pharmacy, patient marketers filled prescriptions for 
controlled substances to be sold on the street for profit. 
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Twenty-eight defendants involved in the scheme were previously sentenced to a combined 
134 years and 11 months in prison and held responsible, both joint and several, for part of 
the $10.7 million in restitution.  To date, 27 codefendants in this matter have accounted for 
a cumulative 371 years towards exclusion from Federal health care programs.    
Pharmaceutical Companies 
MassachusettsMylan Inc. and Mylan Specialty L.P. (collectively, Mylan) agreed to pay 
$465 million to resolve FCA liability associated with the drug EpiPen.  Specifically, Mylan 
resolved allegations that from July 29, 2010, through March 31, 2017, it improperly classified 
EpiPen as a generic drug rather than a brand-name drug for purposes of the Medicaid 
drug rebate program.  As a result, Mylan allegedly underpaid rebates to Medicaid for 
EpiPen and overcharged covered entities that purchased EpiPen under the 340B Drug 
Discount Program, which requires drug manufacturers to charge covered entities prices 
that are at or below ceiling prices.  Concurrent with the FCA settlement, Mylan entered into 
a 5-year CIA, which requires an independent review organization to annually review 
multiple aspects of Mylans practices relating to the Medicaid drug rebate program. 
Physicians 
PennsylvaniaDr. Jeffrey Bado was a physician who owned a medical practice.  Evidence at 
trial showed that Bado had prescribed large amounts of oxycodone and methadone to 
patients outside the usual course of professional practice and without medical necessity.  
By the time Bados practice closed in 2013, he was charging new patients $800 cash per 
visit, charging returning patients $400 cash, and refusing to accept medical insurance.  
Bados patients received at most a cursory physical examination and little other medical 
care or treatment.  Even when Bado knew patients were addicted to oxycodone, were using 
illegal drugs, or were not taking the oxycodone prescribed, he continued to provide 
prescriptions for large amounts of oxycodone.  Multiple former patients testified to 
becoming addicted to oxycodone prescribed by him.  There was no evidence at trial 
suggesting that Bado had referred patients to opioid addiction treatment.  Bado was 
convicted of 307 felony counts, including maintaining a drug-involved premises, drug 
distribution resulting in a death, drug distribution, health care fraud, and making false 
statements to Federal agents.  He was sentenced to 25 years in prison.  
Home Health 
TexasDr. Jacques Roy was engaged in a large-scale, sophisticated home health care 
scheme to defraud Medicare and Medicaid.  According to evidence presented at trial, from 
November 2004 through February 2012, Roy and his codefendants were involved in a 
scheme to recruit patients to receive unnecessary home visits and home health services.  In 
some instances, the home health agencies paid recruiters kickbacks to find Medicare 
beneficiaries at a homeless shelter.  The home health agency owners falsified documents to 
make it appear as though the beneficiaries qualified for home health care services, and Roy 
directed his staff to certify the beneficiaries for home health services, regardless of medical 
need.  After an individual was certified for home health care services, the home health 
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nurses then falsified visit notes to make it appear as though skilled nursing services were 
being provided and continued to be necessary, and the home health agencies and Roy 
submitted fraudulent claims to Medicare. 
 
Roy and his co-defendants were convicted of conspiracy to commit health care fraud, 
health care fraud, making a false statement relating to health care matters, and obstruction 
of justice.  Roy was sentenced to 35 years in prison and ordered to pay $268.1 million in 
restitution, joint and several with his codefendants.  Five additional defendants involved in 
the scheme were previously sentenced to a combined 41 years and 6 months and ordered 
to pay joint and several portions of the $268.1 million restitution.       
 
OhioDelores Knight, owner of the home health agency Just Like Familee (JLF), and three 
of her employees were involved in a scheme to submit false claims to Medicare, Medicaid, 
and other Federal health programs.  Together, the four individuals engaged in a conspiracy 
to prepare and submit forged or false records in support of previously submitted and 
reimbursed billings for patients they did not actually provide face-to-face services.  Delores 
Knight and her son, Isaac Knight, the administrator of one of the JLF offices, were found 
guilty of conspiracy to commit health care fraud and health care fraud.  Delores Knight was 
also convicted of money laundering.  The defendants were ordered to serve a combined 17 
years and 3 months in prison, and ordered to pay $8.1 million in restitution, joint and 
several.  Director of nursing Sonja Ferrell and biller Juliet Bonner pleaded guilty to health 
care fraud and were sentenced to serve a combined 1 year and 6 months in prison, and 
were ordered to pay $1.4 million in restitution, joint and several. 
Transportation 
PennsylvaniaYuriy Nesterov, owner of Triumph Ambulance, Inc., engaged in a scheme to 
defraud Medicare.  Specifically, Triumph Ambulance employees, at the direction of 
Nesterov, transported Medicare beneficiaries by ambulance or in personally owned vehicles 
to regularly scheduled dialysis treatments.  These patients were not medically eligible for 
ambulance transportation reimbursed by Medicare.  Nesterov submitted false claims to 
Medicare for reimbursement and also provided kickbacks to Medicare beneficiaries.  
Nesterov pleaded guilty to 12 counts of health care fraud and was sentenced to 3 years 
confinement and ordered to pay $690,390 in restitution. 
Durable Medical Equipment 
New JerseyMultiple businesses entered into two separate settlement agreements to 
resolve allegations that the defendants knowingly caused false claims to be submitted in 
connection with cardiac monitoring services.  The first settlement agreement was with AMI 
Monitoring, Inc.; Spectocor, LLC; and Joseph Bogdan, and the second agreement was with 
Medi-Lynx Cardiac Monitoring, LLC (Medi-Lynx), and Medicalgorithmics S.A. 
 
The defendants allegedly marketed cardiac monitoring services and designed a Web-based 
registration system that led to the submission of, or caused the submission of, false claims 
for cardiac monitoring services.  Specifically, AMI Monitoring, Inc. and Medi-Lynx marketed 
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  Department of Health and Human Services Office of Inspector General 
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a cardiac monitoring device called the PocketECG.  This device, created by 
Medicalgorithmics, S.A., is unique in that it is capable of performing as a short-term Holter 
monitor, a medium-term event monitor, or a longer term telemetry monitor.  Although the 
PocketECG was capable of performing all three cardiac monitoring functions, the 
defendants allegedly designed the Web-based device registration system in such a way as 
to steer physicians to select telemetrywhich provided the highest rate of 
reimbursementfor all Medicare patients, even when they wanted to select one of the less 
expensive services. 
 
The defendants agreed to pay a total of $13.4 million to resolve their FCA liability, and 
Medi-Lynx also agreed to a 5-year CIA. 
 
GeorgiaBarbara Wallace was the manager of MBA Diabetic Footwear Solutions, a 
Medicaid provider.  The investigation disclosed that Wallace caused fraudulent claims to be 
submitted to Medicaid for medical equipment that was not medically necessary, not 
prescribed by a physician, and, on many occasions, never provided to a patient.  Wallace 
then used the money defrauded from Medicaid for her own personal benefit.  Wallace 
pleaded guilty to one count of health care fraud and was sentenced to 3 years and 5 
months in prison and ordered to pay $948,361 in restitution and forfeiture. 
Laboratories 
South CarolinaBerkeley Heartlab, Inc. (Berkeley) and its indirect owner, Quest Diagnostics, 
Inc. (Quest), entered into a settlement agreement to resolve that Berkeley knowingly 
submitted or caused to be submitted false or fraudulent claims to Medicare and TRICARE.  
From 1999 through January 2012, the defendant allegedly offered and/or paid illegal 
remuneration to health care providers through process and handling payments related to 
the collection of blood to induce referrals in violation of the anti-kickback statute.  To 
induce referrals to Berkeley for testing, Berkeley allegedly offered to waive and/or waived 
cost-sharing obligations (such as copayments and deductibles) for certain TRICARE 
beneficiaries, in violation of the anti-kickback statute.  The defendant also allegedly 
submitted or caused to be submitted claims for payment to Medicare and TRICARE for 
tests that were not medically necessary or that were not reimbursable.  Quest and Berkeley 
agreed to pay $6 million to resolve Berkeleys liability under the FCA. 
Radiology 
CaliforniaValley Tumor Medical Group (Valley Tumor) entered into a settlement 
agreement to resolve allegations that from January 2006 through November 2015, the 
defendant billed Medicare, Medi-Cal (Californias Medicaid program), and TRICARE for 
radiation treatments at the Ridgecrest location without the requisite physician supervision.  
Specifically, radiation therapists employed by Valley Tumor allegedly administered regular 
radiation treatments when no doctor was present onsite and there was thus no doctor 
physically available to supervise such treatments.  The defendant agreed to pay $3 million 
to resolve its liability under the FCA. 
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Nursing Homes 
CaliforniaGenesis Healthcare, Inc. (Genesis) entered into a settlement agreement to 
resolve allegations that it knowingly caused false claims to be submitted to Medicare.  
Genesis owns SNFs, assisted/senior living facilities, and a rehabilitation therapy business, 
which were all defendants.  Specifically, the defendants were alleged to have submitted 
false claims to Medicare for hospice services provided to patients who were not eligible for 
the benefit; knowingly submitted claims to Medicare for services that were not medically 
necessary or unskilled in nature; billed for more therapy minutes than the patient received 
or at a higher level than medically necessary; and submitted claims to Medicare and Medi-
Cal for services that were not rendered, grossly substandard or worthless.  Genesis agreed 
to pay a total of $52.1 million to resolve its FCA liability. 
Identity Theft 
New YorkDavit Mirzoyan was a leader of the Mirzoyan-Terdjanian Crew, a criminal 
organization responsible for defrauding Medicare.  According to the investigation, 
Mirzoyan and his codefendants stole the identities of doctors, set up fake medical clinics in 
their names, and then stole identities of patients so that Medicare could be billed for 
fictitious medical treatments.  Mirzoyan pleaded guilty to racketeering, conspiracy to 
commit health care fraud, bank fraud, money laundering, and identity theft.  He was 
sentenced to 17 years and 6 months in prison and ordered to pay $20 million in restitution 
and $20 million in forfeiture.  Sixteen defendants involved in the scheme were previously 
sentenced to a combined 51 years and 1 month in prison. 
Hospitals 
CaliforniaPacific Alliance Medical Center, an acute-care hospital, entered into a 
settlement agreement to resolve allegations that it engaged in improper financial 
relationships with referring physicians.  Specifically, these relationships took the form of 
arrangements under which the hospital allegedly paid above-market rates to rent office 
space in physicians offices, and marketing arrangements that allegedly provided undue 
benefit to physicians practices.  The hospital agreed to pay a total of $42 million to resolve 
its FCA liability and enter into a 5-year CIA. 
Kickbacks 
New YorkGiorgi Buleishvili was a patient recruiter when he took part in a scheme to 
defraud Medicare and Medicaid.  According to the investigation, Buleishvili and his co-
defendants recruited financially disadvantaged and homeless people insured by Medicare 
and/or Medicaid (the phony patients) to undergo unnecessary medical tests.  The phony 
patients were recruited from soup kitchens and local welfare offices.  They were coached 
on what to say on various medical forms in order to make it falsely appear that the medical 
tests to which the defendants intended to subject them were medically necessary.  The 
tests were typically performed by unlicensed personnel at the clinics in exchange for cash.  
The clinics then billed Medicare and Medicaid for administering those unnecessary tests. 
 
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Buleishvili pleaded guilty to conspiracy to commit mail fraud, wire fraud, and health care 
fraud.  He was sentenced to 2 years and 10 months in prison and was ordered to pay 
$13.7 million in restitution, joint and several.  Eleven defendants involved in the scheme 
were previously sentenced to a combined 18 years in prison and held jointly and severally 
responsible for various amounts of the total $26.2 million restitution.  
Health Information Technology 
VermonteClinicalWorks, LLC (ECW), one of the nations largest vendors of EHR software, 
and three senior executives agreed to pay $155 million to settle allegations related to 
causing health care providers to submit false claims to the Medicare and Medicaid EHR 
Incentive Programs.  Specifically, from August 2008 through February 1, 2017, ECW 
allegedly concealed from its customers that its software did not comply with the 
requirements for meaningful use certification.  ECWs failure to comply with requirements 
to use standardized drug codes, to accurately record user actions in an audit log, and to 
always accurately record diagnostic imaging orders or perform drug interaction checks 
posed potential risks to patient safety. Concurrently with the settlement, ECW entered into 
a 5-year CIA that requires it to, among other things, retain an independent software quality 
oversight organization to assess ECWs software quality control systems and provide 
written semiannual reports to OIG; to provide notice to its customers of any safety related 
issues; and to maintain on its customer portal a comprehensive list of such issues and any 
steps users should take to mitigate potential risks to patient safety. 
Managed Care 
FloridaFreedom Health Inc. (FHI), a managed care service provider, and its related 
corporate entities agreed to pay more than $31 million to resolve allegations that they 
violated the FCA by submitting or causing others to submit unsupported diagnosis codes 
to CMS, resulting in inflated reimbursements from 2008 to 2013 in connection with two 
Florida Medicare Advantage plans.  FHI also allegedly made material misrepresentations to 
CMS regarding the scope and content of its provider networks in its Medicare Advantage 
applications to CMS to expand into new Florida counties and in other States.  Concurrently 
with the settlement, FHI and Optimum HealthCare, Inc., as operators of Medicare 
Advantage plans, entered into a 5-year CIA containing a review of accuracy of the provider 
network information when the companies expand their service area or offer new plans 
under Medicare Advantage and an annual risk adjustment data and system review. 
Health Care Fraud Prevention and Enforcement 
In May 2009, the Secretary of HHS and the Attorney General announced the creation of the 
Health Care Fraud Prevention and Enforcement Action Team (HEAT), an interagency effort 
focused specifically on combating health care fraud.  HEAT includes senior officials from 
DOJ and HHS who are strengthening programs and investing in new resources and 
technologies to prevent and combat fraud, waste, and abuse. 
 
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  Department of Health and Human Services Office of Inspector General 
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HEAT Provider Compliance Training  
OIG provides free training on our website for health care providers, compliance 
professionals, and attorneys.  OIGs Provider Compliance Training was an initiative 
developed as part of HEAT in 2011 that continues to reach the health care community with 
OIGs message of compliance and prevention via free downloadable comprehensive 
training materials and podcasts.  OIGs provider compliance training resources can be 
accessed at https://oig.hhs.gov/compliance/compliance-guidance/index.asp. 
 
Medicare Fraud Strike Force Activities  
In 2007, Medicare Fraud Strike Force teams began an effort to combine resources of 
Federal, State, and local law enforcement entities to prevent and combat health care fraud, 
waste, and abuse.  These partnerships among OIG and HHS, DOJ, U.S. Attorneys Offices, 
the Federal Bureau of Investigation, and State and local law enforcement have a common 
goal: to successfully analyze health care fraud data and investigative intelligence to quickly 
identify fraud and bring prosecutions.  Strike Force teams operate in 10 areas: Miami, 
Orlando, and Tampa, Florida; Dallas and Houston, Texas; Los Angeles, California; Detroit, 
Michigan; Brooklyn, New York; southern Louisiana; and Chicago, Illinois.  
 
In July 2017, the Medicare Fraud Strike Force led an unprecedented nationwide sweep in 41 
Federal districts, with the assistance of 30 MFCUs.  The sweep resulted in criminal and civil 
charges against 412 individualsincluding 115 doctors, nurses, and other licensed medical 
professionalsfor their alleged participation in health care fraud schemes involving 
approximately $1.3 billion in false billings.  In addition, OIG issued 295 exclusion notices 
related to the use and abuse of controlled substances.  For more information on this 
takedown, visit our Strike Force website at https://oig.hhs.gov/newsroom/media-
materials/2017/2017-takedown.asp. 
 
During this semiannual reporting period, Strike Force efforts resulted in the filing of charges 
against 137 individuals or entities, 112 criminal actions, and more than $504.6 million in 
investigative receivables. 
 
Below are examples of Strike Force cases. 
 
MichiganThree colleagues at Advanced Care Services each pleaded guilty to conspiracy 
to commit health care fraud, and one of them also pleaded guilty to conspiracy to 
distribute and possess with intent to distribute controlled substances.  They were sentenced 
to a combined 6 years and 5 months in prison and ordered to pay $2.5 million in 
restitution, joint and several.  The defendantsJorge Azar, an owner of Advanced Care 
Services; Diontay Bradley, a patient recruiter; and Jellie Villalon, the administrative 
directorengaged in a conspiracy to unlawfully distribute controlled substances and to 
defraud Medicare by billing for services not rendered and billing for unnecessary services.  
According to the investigation, from June 2011 through October 2015, patient recruiters 
would recruit Medicare beneficiaries.  After performing a cursory examination or no exam 
at all, a physician would write the beneficiary a prescription for a controlled substance.  The 
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  Department of Health and Human Services Office of Inspector General 
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beneficiary would then fill the prescription and sell the medication back to the recruiter for 
illegal street trafficking.  Another defendant, Dr. Rodney Moret, pleaded guilty and is 
awaiting sentencing.   
 
FloridaDr. Miguel Burgos was the medical director of four Orlando-area infusion clinics; 
Yosbel Marimon was an owner of one of the clinics.  Burgos and Marimon admitted that 
they billed Medicare and private insurance companies for, among other things, expensive 
infusion therapy medications, including anticancer chemotherapeutic medications, despite 
never purchasing or dispensing the drugs.  Burgos and Marimon also admitted to 
submitting false claims to Medicare and private insurance companies for physical therapy 
conducted at the clinics, even though there was no licensed physical therapist on staff at 
the clinics.  In connection with the scheme, the defendants admitted that they billed 
Medicare and private insurers approximately $13.7 million, of which approximately $9.8 
million was paid on the fraudulent claims.  Burgos and Marimon both pleaded guilty to 
conspiracy to commit health care fraud and were sentenced to a combined 12 years and 
10 months in prison.  They were ordered to pay $9.8 million in restitution, joint and several.   
 
Other Criminal and Civil Enforcement Activities  
Special Assistant U.S. Attorney Program  
 
During this reporting period, DOJ and OIG continued their participation in a program in 
which OIG attorneys, some of whom are Special Agents, serve as Special Assistant U.S.  
Attorneys.  These OIG attorneys are detailed full time to the Fraud Section of DOJs Criminal 
Division for temporary assignments, including assignments to the Health Care Fraud Strike 
Force.  Other attorneys prosecute matters on a case-by-case basis.  Both arrangements 
offer excellent litigation training for OIG attorneys and enhance collaboration between the 
departments in their efforts to fight fraud.  Under this program, OIG attorneys have 
successfully litigated important criminal cases relating to the fraudulent billing of medical 
equipment and supplies, infusion therapy, and physical therapy, as well as other types of 
Medicare and Medicaid fraud. 
 
Most Wanted Fugitives Listed on OIGs Website  
 
The OIG Most Wanted Fugitives website continues to garner national and international 
attention and has greatly assisted in helping to capture fugitives charged with defrauding 
Federal health care programs and stealing millions of taxpayer dollars.  The Most Wanted 
Fugitives website is continually updated and features a profile for each fugitive as well as 
an online tip form and a hotline number for individuals to report fugitive-related 
information to OIG, in English or Spanish, 24 hours a day, 365 days a year.  The Most 
Wanted Fugitives list can be accessed at https://oig.hhs.gov/fraud/fugitives/. 
 
One of OIGs Most Wanted Fugitives, Hector Anca Soca, was captured during this reporting 
period.  Anca Soca, who was the owner of M&K Home Health in Miami, Florida, was 
indicted on charges of health care fraud in January 2016 and fled the United States.  
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According to the indictment, from around October 2014 through around September 2015, 
he conspired to defraud Medicare by submitting false claims.  Specifically, he obtained the 
names and Medicare identification numbers of Medicare beneficiaries, along with the 
names and provider numbers of physicians, in order to submit false claims to Medicare.  
Investigators believe that Anca Soca, through M&K, was paid approximately $3.7 million for 
services that M&K did not render.  Anca Soca was detained while trying to enter the United 
States from an inbound flight originating in Cuba.  His capture is the result of the tireless 
effort and teamwork between HHS and the FBI. 
 
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most 
Wanted Deadbeat Parents website at https://oig.hhs.gov/fraud/child-support-
enforcement/index.asp.  The site identifies parents whose failure to pay court-ordered child 
support for their children places unnecessary strain on the custodial parents and the 
children as well as on agencies that enforce these matters.  The Human Services Reviews 
section of this Semiannual Report provides examples. 
HHS OIG Hotline 
Part of OIGs Office of Investigations, the hotline is the public-facing division for OIGs 
intake and evaluation of fraud tips.  The mission of the HHS OIG Hotline is to support OIGs 
oversight responsibilities in safeguarding the integrity of all programs and personnel under 
HHSs purview and protecting them from fraud, waste, and abuse.  The hotline achieves its 
mission through its staffs dedication to timely intake and analysis of information received 
from various sources, such as the Report Fraud link on the HHS OIG website.  During this 
semiannual reporting period, the OIG Hotline reported expected recoveries of $9.9 million 
as a direct result of cases originating from hotline complaints. 
 
OIG Hotline Activity (04/01/1709/30/17) 
Contacts to 1-800-HHS-TIPS phone line,  58,510 
including callers seeking information   
Total tips evaluated  13,781 
Tips referred for action  10,888 
Closed; no basis provided for further  1,492 
action 
Closed; no HHS violation  1,401 
   
Sources of tips referred for action   
Phone  5,815 
OIG website  3,966 
Letters/faxes  1,107 
 
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  Department of Health and Human Services Office of Inspector General 
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State Medicaid Fraud Control Units  
OIG Oversight of State Medicaid Fraud Control Units 
MFCUs are key partners with OIG in the fight against fraud, waste, and abuse in State 
Medicaid programs.  OIG has oversight responsibility for MFCUs and administers grants 
that provide Federal funding for Unit operations.  The Federal Government reimburses 75 
percent of the costs of operating all existing Units, which are in 49 States and the District of 
Columbia.  MFCUs investigate and prosecute Medicaid provider fraud and patient abuse 
and neglect in health care facilities or board and care facilities. 
Medicaid Fraud Control Units Fiscal Year 2016 Annual Report  
(OEI-09-17-00210), May 2017 
This annual report highlights statistics on the accomplishments of the 50 MFCUs during FY 
2016.  OIG found that FY 2016 continued a trend of increasing numbers of convictions.  Just 
over one-third of the 1,564 MFCU convictions involved personal care services attendants.  
Fraud cases accounted for 74 percent of the MFCU convictions, while 26 percent involved 
patient abuse or neglect.  MFCUs reported 998 civil settlements and judgments, almost half 
of which involved pharmaceutical manufacturers.  MFCUs reported almost $1.9 billion in 
criminal and civil recoveries.  In an appendix to the report, OIG summarizes beneficial 
practices by the MFCUs that were identified in onsite review reports published during FYs 
20112016. 
OIG Onsite Reviews of MFCUs   
In addition to an annual recertification review of each MFCU, OIG conducts periodic reviews 
of a sample of MFCUs.  OIG evaluates MFCU operations on the basis of 12 performance 
standards and assesses compliance with laws, regulations, and OIG policy guidance.  
During the reporting period, OIG issued reports of onsite reviews of the following MFCUs:  
  Wyoming State Medicaid Fraud Control Unit: 2016 Onsite Review  
(OEI-09-16-00530), September 2017 
  Alaska State Medicaid Fraud Control Unit: 2016 Onsite Review  
(OEI-09-16-00430), September 2017 
  Kentucky State Medicaid Fraud Control Unit: 2016 Onsite Review  
(OEI-06-17-00030), September 2017  
  Colorado State Medicaid Fraud Control Unit: 2016 Onsite Review  
(OEI-06-16-00520), August 2017 
  Wisconsin State Medicaid Fraud Control Unit: 2016 Onsite Review  
(OEI-07-16-00240), May 2017 
 
The following case is an example of OIGs joint efforts with MFCUs: 
 
PennsylvaniaDr. John Johnson owned multiple businesses, including a group of pain 
management clinics called Lighthouse Medical, LLC.  According to the investigation, from 
May 2011 through November 2013, Dr. Johnson, through Lighthouse Medical, engaged in a 
pattern of fraudulent activity by receiving kickbacks from Universal Oral Fluids Lab in 
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  Department of Health and Human Services Office of Inspector General 
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exchange for sending oral swabs to Universal Oral Fluids Lab for testing that was paid for 
by Medicare, the Pennsylvania Medicaid program, or private insurance.  Also, Dr. Johnson 
failed in 2013 to remit to the Internal Revenue Service (IRS) the payroll taxes he collected 
from his employees at two of his businesses.  Dr. Johnson pleaded guilty to conspiracy and 
willful failure to remit employment taxes and was sentenced to 7 years in prison and 
ordered to pay $2.3 million in restitution to CMS and $722,476 in restitution to the IRS.  
This case was initiated on the basis of fraud tips provided to the HHS OIG hotline. 
Advisory Opinions and Other Industry Guidance  
As part of OIGs continuing efforts to promote the highest level of ethical and lawful 
conduct by the health care industry, we issue advisory opinions and other guidance to 
educate industry and other stakeholders on how to avoid fraud, waste, and abuse.  
Advisory opinions, which are developed in consultation with DOJ, are issued to requesting 
parties regarding the interpretation and applicability of certain statutes relating to Federal 
health care programs.  The Health Insurance Portability and Accountability Act of 1996 
(HIPAA),  205, allows OIG to provide case-specific formal guidance on the application of 
the anti-kickback statute and safe harbor provisions and other OIG health care fraud and 
abuse sanctions.  During FY 2017, OIG received 27 requests for advisory opinions and 
issued 4 advisory opinions and no modifications of advisory opinions.  
Sanction Authorities and Other Administrative Actions  
Various Federal laws provide authorities the ability to impose administrative sanctions for 
fraud and abuse as well as other activities that pose a risk to Federal health care programs 
and their beneficiaries.  Sanctions include the exclusion of individuals and entities from 
Federal health care programs and the imposition of CMPs for submitting false and 
fraudulent claims to a Federal health care program or for violating the anti-kickback statute, 
the physician self-referral law (commonly referred to as the Stark Law), or the Emergency 
Medical Treatment and Labor Act (EMTALA), also known as the patient dumping statute.   
 
During this semiannual reporting period, OIG imposed 1,887 administrative sanctions in the 
form of program exclusions or administrative actions for alleged fraud or abuse or other 
activities that posed a risk to Federal health care programs and their beneficiaries.  
Exclusion and penalty authorities are described in Appendix D and on our website at 
http://oig.hhs.gov/fraud/enforcement/cmp/index.asp.  
 
Program Exclusions  
During this semiannual reporting period, OIG excluded 1,822 individuals and entities from 
Medicare, Medicaid, and other Federal health care programs. Most of the exclusions 
resulted from convictions for crimes relating to Medicare or Medicaid, for patient abuse or 
neglect, or as a result of license revocation.  OIG is also responsible for reinstating providers 
who apply and have met the requirements of their exclusions.  For a list of excluded 
individuals and entities, see https://exclusions.oig.hhs.gov/.  
 
 
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  Department of Health and Human Services Office of Inspector General 
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The following are examples of program exclusions: 
 
MinnesotaGeorge Sumo Kpingbah was certified as a nursing assistant.  According to 
court documents, Kpingbah was employed as a nursing assistant at a nursing facility where 
he sexually assaulted an 83-year old patient.  The patient had dementia and Alzheimers 
disease and was completely dependent on her caretakers due to her advanced dementia.  
Kpingbah was sentenced to 8 years in prison based on his conviction for criminal sexual 
conduct.  OIG excluded Kpingbah for a minimum of 20 years.    
 
New YorkNarco Freedom, Inc., a now-defunct provider of outpatient drug rehabilitation, 
agreed to resolve FCA allegations that it submitted claims to Medicaid for services 
predicated on illegal kickbacks and services not rendered.  As a part of the settlement, 
Narco Freedom admitted that between 2006 and 2014, it induced beneficiaries to use its 
outpatient programs by providing the beneficiaries with subsidized housing.  Narco 
Freedom also admitted that between 2008 and 2011, it paid operators of other short-term 
residences to condition residency at their residences on enrollment in and attendance at a 
Narco Freedom outpatient program.  Narco Freedom also admitted that in 2010, it directed 
employees to falsify records to reflect that counselors had treated certain Medicaid 
beneficiaries.  As part of the settlement, Narco Freedom, which is currently in Chapter 7 
bankruptcy, agreed that the United States will receive a $50.5 million bankruptcy claim.  For 
its conduct, Narco Freedom is excluded from all Federal health care programs for 50 years. 
 
Suspensions and Debarments  
Suspensions and debarments are administrative tools used by HHS and other Federal 
agencies to protect the Government from individuals and entities that have engaged in 
contract fraud, have misused grant funds, or are otherwise not presently responsible.  
Because these are Government-wide sanctions, an individual or entity that has been 
suspended or debarred by HHS or any other agency is ineligible to participate in any future 
funding opportunities across the Federal Government for a specified period of time.   
 
OIG refers individuals and entities that have potentially engaged in grant or contract fraud 
or misconduct to the HHS Suspension and Debarment Official, who is responsible for 
determining whether to impose a suspension or debarment.  OIG continues to develop a 
robust Suspension and Debarment program and uses this tool to protect Government 
programs against fraud, waste, poor performance, and noncompliance with contract 
provisions or applicable law. 
 
The following are debarment examples.  
 
AlabamaJonathan Wade Dunning was the CEO of Birmingham Health Center, a federally 
funded health care center.  The investigation disclosed that Dunning engaged in a 
fraudulent scheme that embezzled approximately $17 million in Federal grant funds.  The 
money was meant to provide quality health care for the homeless and low-income 
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  Department of Health and Human Services Office of Inspector General 
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individuals.  Instead, contrary to the stated purpose of the grant, funds were fraudulently 
diverted to Dunnings multiple corporations for personal use.  Dunning was found guilty on 
98 counts of conspiracy, wire fraud, bank fraud and money laundering.  He was sentenced 
to 18 years in prison and ordered to pay $13.5 million in restitution.  Dunning and his nine 
companies were debarred for a period of 10 years, based on an OIG referral to the 
Department. 
 
MontanaJames Leroy Emerson stole tribal funds originally provided by the ACF to the 
Blackfeet Tribe of the Blackfeet Nation.  Specifically, from 2007 through 2010, Emerson 
applied for and received TANF and SNAP benefit payments from the Blackfeet Tribe even 
though he was ineligible.  Emerson failed to report receipt of the improper tribal TANF 
benefits as income to the Glacier County Office of Public Assistance.  He withheld this 
information, misrepresenting his income, which resulted in overpayment of benefits.  The 
defendant was convicted of theft of federally provided welfare benefits by fraud, Federal 
welfare assistance fraud, and theft from an Indian tribal organization, and was ordered to 
pay $30,000 in restitution.  Emerson was debarred for a period of 3 years as a result of an 
OIG referral to the Department. 
 
Corporate Integrity Agreements  
Many health care providers elect to settle their cases before litigation.  As part of the 
settlements, providers often agree to enter into CIAs with OIG to avoid exclusions from 
Medicare, Medicaid, and other Federal health care programs.  Under a CIA, a provider 
commits to establishing a program and taking other specified steps to ensure future 
compliance with Medicare and Medicaid rules.  The compliance programs are designed, in 
part, to prevent future fraud.  OIG monitors providers compliance with these agreements 
and may impose penalties on entities that fail to comply with the requirements of their 
CIAs.   
 
The following is a CIA enforcement example. 
 
New YorkLuitpold Pharmaceuticals, Inc. and American Regent, Inc.subsidiaries of 
Daiichi Sankyo, Inc., a pharmaceutical companypaid just over $1.2 million to settle Civil 
Monetary Penalties Law (CMPL) liability for conduct Daiichi disclosed to OIG under the 
Reportable Events Section of the Daiichi Sankyo, Inc., CIA.  The settlement resolves 
allegations that the Daiichi subsidiaries provided illegal remuneration to a physician and 
her entity in the form of payments and free services, in connection with a pilot program 
for the management of iron deficiency anemia.  Daiichi entered into the CIA in 2015 in 
connection with its settlement of FCA liability regarding the alleged provision of illegal 
remuneration to physicians to induce them to prescribe certain drugs.  Certain Daiichi CIA 
requirements apply to Daiichi subsidiaries and other affiliates. 
 
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  Department of Health and Human Services Office of Inspector General 
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Civil Monetary Penalties and Affirmative Exclusions  
The CMPL authorizes OIG to impose administrative penalties, assessments, and exclusions 
against a person who, among other things, submits, or causes to be submitted, claims to a 
Federal health care program that the person knows, or should know, are false or fraudulent.  
The Exclusions Statute also authorizes OIG to exclude a person who violates the CMPL.  
When OIG excludes an individual under the Exclusions Statute for engaging in conduct that 
violates the CMPL, it is known as an affirmative exclusion.  During this semiannual reporting 
period, OIG concluded cases involving more than $22.8 million in CMPs and assessments.  
 
The following is an example of a case under the CMPL. 
 
ConnecticutHartford Hospital and its sister hospital, Midstate Medical Center, agreed to 
pay more than $2.8 million in assessments and penalties for submitting claims between 
February 2009 and March 2015 for home health services that patients received within 3 
days of being released from Hartford Hospital, with the release improperly coded as a 
discharge rather than a post-acute care transfer. 
 
Patient Dumping  
Some of the CMPL cases that OIG resolved during this semiannual reporting period were 
pursued under EMTALA, a statute designed to prevent hospitals from denying emergency 
care to patients and to ensure patient access to appropriate emergency medical services.   
 
The following are EMTALA case examples. 
 
South CarolinaIn the largest settlement under EMTALA in OIGs 30-year enforcement of 
the statute, AnMed Health, a 533-bed hospital in Anderson, South Carolina, agreed to pay 
$1.2 million to resolve its potential liability.  OIG alleged that between April 2012 and July 
2013, AnMed Health violated EMTALA by failing to provide appropriate medical screening 
examinations and stabilizing treatment to patients who presented to the emergency 
department with psychiatric conditions.  Specifically, OIG alleged that despite the 
availability of on-call psychiatrists and open beds in its psychiatric unit, AnMed Health kept 
35 individuals in its emergency department pursuant to a longstanding policy of not 
admitting involuntary patients to its psychiatric unit.  These 35 individuals, who suffered 
from serious psychiatric disorders, were kept in AnMed Healths emergency department for 
6 to 38 days each until they were discharged or transferred to another medical facility. 
 
GeorgiaMonroe County Hospital agreed to pay $25,000 to resolve its potential liability 
under EMTALA.  OIG alleged that Monroe County Hospital violated EMTALA when it failed 
to provide an appropriate medical screening examination and stabilizing treatment for a 
woman who presented to the emergency department complaining she was 36 weeks 
pregnant and her water had broken.  The patient told a nurse that she wanted to see her 
physician in Macon, Georgia.  Without providing a medical screening examination, 
emergency department staff decided that the patient could go see her physician in Macon.  
The patient was then escorted to her car and told to call 911.  Emergency medical services 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
arrived and found the patient in her car.  She was brought to another hospital where she 
delivered her child within an hour of arriving. 
 
Self-Disclosure Programs  
Health care providers, suppliers, or other individuals or entities subject to CMPs can apply 
for acceptance into the Provider Self-Disclosure Protocol, a program created in 1998 for 
voluntary disclosure of self-discovered evidence of potential fraud.  The self-disclosure 
program may give providers the opportunity to avoid costs or disruptions associated with 
Government-directed investigations and civil or administrative litigation. 
Application processes for two additional self-disclosure programs were recently added to 
the OIG website for HHS contractors and grantees.  The OIG contractor self-disclosure 
program provides contractors the opportunity to self-disclose when they have potentially 
violated the FCA or other Federal criminal laws prohibiting fraud, conflict of interest, 
bribery, or gratuity.  This self-disclosure process is available only to those with a Federal 
Acquisition Regulation-based contract with HHS.  The OIG Grant Self-Disclosure program is 
available for application by HHS grantees or HHS grant subrecipients and provides the 
opportunity for voluntary disclosure to OIG of potential fraud.  OIG evaluates the reported 
results of each internal investigation under the provider self-disclosure protocol to 
determine the appropriate course of action.  The self-disclosure guidelines are available on 
the OIG website at https://oig.hhs.gov/ 
compliance/self-disclosure-info/index.asp.  During this semiannual reporting period, 
provider self-disclosure cases resulted in more than $12.6 million in HHS receivables.  
 
The following are examples of provider self-disclosure settlements. 
 
LouisianaMadison Parish Hospital Service District d/b/a Madison Parish Hospital (MPH) 
agreed to pay $1.8 million to resolve its liability under the CMPL for conduct it self-
disclosed to OIG.  Specifically, OIG alleged that MPH (1) improperly submitted claims to 
Medicare related to certain inpatient admissions; (2) received remuneration in the form of 
inpatient computed tomography equipment and services provided below fair market value 
(FMV) from an independent diagnostic testing facility (IDTF) and paid remuneration to the 
IDTF in the form of below-FMV medical office space and support services; and (3) 
improperly reported illegal remuneration from hospital vendors paid to a former CEO on 
MPH cost reports then used by the Medicare and Medicaid program to calculate 
reimbursement rates to MPH, resulting in overpayments. 
 
TexasAfter self-disclosing conduct to OIG, United Medical Center (UMC) Physicians 
agreed to pay more than $3.3 million to resolve its liability under the CMPL.  Specifically, 
OIG alleged that between January 1, 2011, through September 2, 2015, UMC Physicians 
improperly filed claims for (1) evaluation and management services and (2) Doppler and 
ultrasound testing services purportedly performed by a physician that were upcoded, not 
   
rendered, or otherwise not supported by the record.
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  Department of Health and Human Services Office of Inspector General 
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Public Health Agencies  
Public Health Agencies Reports and Reviews  
Centers for Disease Control and Prevention 
CDC Generally Met Its Inspection Goals for the Federal Select Agent Program; However, 
Opportunities Exist To Strengthen Oversight (OEI-04-15-00430), May 2017  
We found that the Division of Select Agents and Toxins (DSAT) at the Centers for Disease 
Control and Prevention (CDC) generally met its Federal Select Agent Program inspection 
goals; however, opportunities exist to improve DSATs oversight.  The findings identify 
potential vulnerabilities in DSATs oversight of entities possessing, using, or transferring 
select agents and toxins, which could pose a risk to public health and safety.  This report 
contained no recommendations, but it did offer suggestions that CDC could consider in its 
ongoing efforts to improve oversight of the Federal Select Agent Program.  This is the first 
of several OIG reports on the Federal Select Agent Program.   
 
Presidents Emergency Plan for AIDS Relief 
The Presidents Emergency Plan for AIDS Relief (PEPFAR) was authorized to receive $48 
billion in funding for the 5-year period beginning October 1, 2008, to assist foreign 
countries in combating HIV/AIDS, tuberculosis, and malaria.  CDC awards PEPFAR funds to 
and works with ministries of health and other partners in 60 countries to combat HIV/AIDA 
globally.  Additional funds were authorized to be appropriated through 2018. 
During the semiannual reporting period, OIG conducted three audits related to PEPFAR 
funding: 
Management and Development for Health in Tanzania Did Not Always Manage the 
Presidents Emergency Plan for AIDS Relief Funds in Accordance with Award 
Requirements (A-04-16-04045), June 2017 
Management and Development for Health (MDH), located in Dar es Salaam, Tanzania, did 
not always manage PEPFAR funds in accordance with award requirements.  Of the 
60 financial transactions in our sample, 9 transactions totaling $181,000 were not allowable.   
Additionally, MDH used $23,000 in PEPFAR funds to pay unallowable Value-Added Taxes 
(VAT) on purchases that have not been reimbursed by the Tanzania Revenue Authority.  
MDH generally concurred with our recommendations that it (1) refund to CDC $101,000 for 
transactions that it could not fully support with adequate documentation and $80,000 for 
unallowable PEPFAR expenditures and (2) work with CDC to obtain $23,000 of VAT 
reimbursement from the Tanzanian Government.  MDH also concurred with our procedural 
and policy recommendations and described some of the actions it has taken, or plans to 
take, to address them. 
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  Department of Health and Human Services Office of Inspector General 
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Ariel Foundation Against Pediatric AIDS Managed and Expended the Presidents 
Emergency Plan for AIDS Relief Funds in Accordance with Award Requirements (A-04-16-
04052), June 2017 
Our audit covered the budget periods from September 30, 2011, through September 29, 
2015.  These budget periods were for years 1 through 4 of a 5-year cooperative agreement.  
During the budget periods under review, CDC awarded Ariel $35.8 million, of which Ariel 
expended $29.6 million.  From these PEPFAR fund expenditures, we selected a judgmental 
sample of 60 transactions totaling $2.7 million.  Our sample included transactions for travel 
expenses, vehicle purchases, salaries, and consultation fees. 
Ariel managed PEPFAR funds in accordance with award requirements, so we made no 
recommendations. 
The Ministry of Health and Social Welfare National AIDS Control Program Did Not 
Always Manage and Expend PEPFAR Funds in Accordance with Award Requirements (A-
04-16-04044), August 2017 
The Ministry of Health National AIDS Control Program (the Ministry), located in Dar es 
Salaam, Tanzania, did not always manage and expend PEPFAR funds in accordance with 
award requirements.  Of the 52 financial transactions in our judgmental sample, 27 
transactions totaling $510,584 were allowable, but 27 transactions totaling $495,379 were 
not.  These transactions were unallowable because the Ministry did not provide adequate 
supporting documentation for the expenditures.  In addition, the Ministry did not have a 
time and attendance system to support $1.5 million in funded personnel costs, did not 
always record financial transactions correctly, filed an inaccurate Federal Financial Report 
(FFR), filed one of its FFRs more than 15 months late, did not maintain a United States dollar 
bank account, and paid unallowable value-added taxes. 
The Ministry did not specifically concur or nonconcur with our recommendations that it (1) 
refund to CDC $495,379 of unallowable expenditures from our sample review that it could 
not adequately support, (2) work with CDC to determine the allowability of the $1.5 million 
in personnel costs awarded to the Ministry during the audit period, and (3) develop and 
implement adequate policies and procedures to ensure that it prepares and submits 
accurate FFRs on time.  We also made other procedural and policy recommendations. 
Food and Drug Administration 
Drug Supply Chain Security: Wholesalers Exchange Most Tracing Information (OEI-05-14-
00640), September 2017 
Drug diversion, counterfeiting, and the importation of unapproved drugs may result in 
potentially dangerous drugs entering the drug supply chain, posing a threat to public 
health and safety.  To enhance drug supply chain security, the Drug Supply Chain Security 
Act (DSCSA) requires trading partners in the drug supply chain to create a record of each 
drug product transaction.  The Food and Drug Administration (FDA) can then use such 
tracing records to investigate suspect and illegitimate drug products and potential 
diversion to illegal use. 
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This first study, part of a series of examinations of drug supply chain security, examined 
wholesalers implementation of the DSCSA.  We found that all 31 selected wholesalers 
exchange drug product tracing information.  Of these, 17 wholesalersincluding the 3 
largest wholesalers that account for more than 80 percent of drug distribution revenue
exchange all required drug product tracing information.  The remaining 14 wholesalers 
exchange most elements of drug product tracing information but are missing a few of the 
required elements. 
To ensure that all wholesalers comply with the DSCSA, we recommended that FDA offer 
technical assistance where appropriate.  Specifically, we recommended that FDA provide 
technical assistance to wholesalers regarding direct purchase statements, exempt drugs, 
and exchanging drug product tracing information for transactions involving covered 
entities under the 340B Drug Discount Program and 340B contract pharmacies.  FDA 
concurred with all of our recommendations. 
Challenges Remain in FDAs Inspections of Domestic Food Facilities (OEI-02-14-00420), 
September 2017 
We found that FDA is on track to meet the inspection timeframes mandated by the Food 
Safety Modernization Act (FSMA) for the initial cycles; however, challenges remain as FSMA 
requires FDA to conduct future inspections in timeframes that are 2 years shorter than the 
timeframes for the initial cycles.  Also, inaccuracies in FDAs domestic food facility data 
result in FDAs attempting to inspect numerous facilities that are either out of business or 
otherwise not in operation at the time of the visit.  Although FDA is on track to meet the 
FSMA mandates during the initial cycles, this did not result in a greater number of facilities 
being inspected.  In fact, the overall number of food facilities FDA inspected decreased over 
time.  In addition, FDA did not always take action when it uncovered significant inspection 
violations.  When it did take action, it commonly relied on facilities to voluntarily correct the 
violations.  Also, it rarely took advantage of the new administrative tools provided by FSMA.  
Moreover, FDAs actions were not always timely, nor did they always result in the correction 
of these violations.  Further, FDA consistently failed to conduct timely followup inspections 
to ensure that facilities corrected significant inspection violations.  FDA concurred with all 
four recommendations to: 
  improve how it handles attempted inspections to ensure better use of resources, 
  take appropriate action against all facilities with significant inspection violations, 
  improve the timeliness of its actions so that facilities do not continue to operate 
under harmful conditions, and  
  conduct timely followup inspections to ensure that significant inspection violations 
are corrected. 
FDA Oversight of Tobacco Manufacturing Establishments (OEI-01-15-00300), August 2017 
We found that 171 domestic tobacco manufacturing establishments registered with FDA in 
the first 6 years it has been authorized to regulate tobacco, and that FDA largely met its 
requirement to inspect the establishments biennially.  In addition, through its routine 
surveillance of marketing activities for tobacco products, FDA issued 14 warning letters to 
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  Department of Health and Human Services Office of Inspector General 
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manufacturers mostly for violations of advertising and labeling requirements.  Complete 
and accurate information on registrants will aid FDA in fulfilling its oversight role. 
 
National Institutes of Health 
As Funding for BPA Research Increased, the National Institute of Environmental Health 
Sciences (NIEHS) Followed Its Peer Review Process While Also Exercising Its Discretion 
(OEI-01-15-00150), August 2017 
We found that NIEHS followed its peer review processes as it increased funding for 
bisphenol A (BPA) research and that it used its discretion to fund applications with less 
favorable scores more often for BPA grants than non-BPA grants.  Such discretion is 
allowed and enables NIEHS to be responsive to emerging threats to public health; however, 
applying it frequently or disproportionately in one research area may invite added scrutiny 
of NIEHSs funding decisions. 
 
Legal Actions and Investigations Related to Public Health Agencies 
Health Education Assistance Loan Program 
OIG excludes from Federal health care programs individuals who have defaulted on Health 
Education Assistance Loan (HEAL) loans.  Under the HEAL program, which stopped making 
loans in 1998, HRSA guaranteed commercial loans to students seeking education in health-
related fields.  The students are allowed to defer repayment of the loans until after they 
graduate and begin to earn income.  Although HHSs Program Support Center (PSC) takes 
steps to ensure repayment, some loan recipients do not resolve their debt.  After PSC has 
exhausted efforts to secure repayment of a debt, it declares an individual in default.  The 
Social Security Act permits that thereafter, such individuals may not receive reimbursement 
under Medicare, Medicaid, and all other Federal health care programs for nonpayment of 
the loans.   
HEAL Exclusions   
During this semiannual reporting period, 57 individuals and related entities were excluded 
as a result of a PSC referral of their cases to OIG.  Individuals who have been excluded 
because of default may enter into settlement agreements whereby the exclusions are 
stayed while they pay specified amounts each month to satisfy their debts.  If they default 
on these settlement agreements, they may be excluded until the entire debt is repaid and 
they may not appeal the exclusions.  
After being excluded for nonpayment of their HEAL debts, 2,682 individuals chose to enter 
into settlement agreements or completely repay their debts.  That figure includes 23 
individuals who entered into such settlement agreements or completely repaid their debts 
during this semiannual reporting period.  More than $212 million is being repaid through 
settlement agreements or through complete repayment.  Of that amount, more than $1.9 
million is attributable to this semiannual reporting period.  
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  Department of Health and Human Services Office of Inspector General 
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The following are examples of settlement agreements.  These practitioners entered into 
settlement agreements to repay the amounts indicated: 
 
  Floridaosteopath - $428,075 
  Californiadentist - $88,880 
 
Human Services Agencies Reviews and Enforcement Activities 
Administration for Children and Families 
HHSs Office of Refugee Resettlement Improved Coordination and Outreach to Promote the 
Safety and Well-Being of Unaccompanied Alien Children (OEI-09-16-00260), July 2017 
Since OIGs 2008 report on the topic, HHS has improved its coordination with DHS and 
increased its efforts to promote the safety and well-being of unaccompanied alien children 
(UAC) after their release from HHS custody.  In light of these developments, OIG considers 
its prior recommendationthat the departments clarify their roles and responsibilities 
related to UACto be implemented.  However, we recognize that current efforts do not 
guarantee that all UAC are protected from harm.  Although this report contained no 
recommendations, we encouraged HHSs Office of Refugee Resettlement to: 
  continue its efforts to contact these children after their release to sponsors and 
provide case management services for the most vulnerable; 
  continue to report any concerns about the safety and well-being of UAC to the 
local law enforcement and child protective service agencies that have jurisdiction to 
address such concerns, and to support these agencies in any ways possible; and 
  continue its efforts to share information and coordinate with DHS. 
 
Safety of Children in Foster Care 
Texas Did Not Always Ensure That Allegations and Referrals of Abuse and Neglect of Children 
Eligible for Title IV-E Foster Care Payments Were Recorded and Investigated in Accordance 
with Federal and State Requirements (A-06-15-00049), May 2017 
California Did Not Always Ensure That Allegations and Referrals of Abuse and Neglect of 
Children Eligible for Title IV-E Foster Care Payments Were Properly Recorded, Investigated, 
and Resolved (A-09-16-01000), September 2017 
Texas and California did not always ensure that allegations and referrals of abuse and 
neglect for children in foster care covered by Title IV-E were recorded (both States), 
investigated (both States), and resolved (California) in accordance with Federal and State 
requirements.   
Texas agreed that our findings accurately reflect the conditions that were found, but it did 
not directly address our recommendations that it (1) revise its policy of requiring a 30-day 
timeframe for submitting an investigation report to a period that ensures both quality and 
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timeliness in completing the investigation and (2) ensure that interim meetings between 
investigators and supervisors are held and documented within the required timeframes.  
California agreed with our recommendations that it develop an action plan to ensure that 
complaint investigations are completed in a timely manner; develop additional policies and 
procedures as necessary and follow existing policies and procedures; ensure that the 
complaint system currently under development includes functionality that addresses our 
findings; and provide analysts and their supervisors with periodic mandatory complaint 
investigation training to reinforce their knowledge of the laws, regulations, policies and 
procedures, and best practices related to complaint investigations. 
 
Some Ohio Group Homes Did Not Always Comply With Foster Care Health and Safety 
Requirements (A-05-16-00049), September 2017 
 
Some Oklahoma Group Homes Did Not Always Comply With State and Federal 
Requirements (A-06-16-07004), September 2017   
Although Ohio and Oklahoma conducted the required inspections at all the group homes 
that we reviewed in each State (30 group homes in Ohio and 22 in Oklahoma), this 
monitoring did not ensure that the group homes complied with State and Federal 
requirements related to the health and safety of children in foster care.  Nineteen of the 30 
group homes in Ohio and 17 of the 22 group homes in Oklahoma did not comply or did 
not always comply with 1 or more requirements in these areas: physical and environmental 
safety (17 group homes in Ohio); transportation (12 in Oklahoma); building, utilities, and 
grounds (12 in Oklahoma); fire safety (10 in Oklahoma and 4 in Ohio); criminal records 
checks (5 in Ohio); food service (4 in Oklahoma); safety and emergency preparedness (4 in 
Oklahoma); staff records (3 in Ohio); and physical facility and equipment (1 in Oklahoma). 
 
Ohio and Oklahoma concurred with our recommendations that they consider additional 
outreach programs for the group homes, such as training.  Oklahoma concurred with our 
recommendation that it ensure that monitoring staff document and resolve all issues of 
noncompliance of group homes in a timely manner. 
 
Ohio said that it was in accordance with our recommendations that it ensure that all 
instances of noncompliance are documented and corrected; ensure that the group homes 
adhere to all requirements for the health and safety of children by continuing onsite visits; 
and ensure that group homes obtain the required criminal records checks for all employees 
who provide direct care to children. 
 
Oklahoma did not concur with our recommendation that it revise Oklahoma licensing 
requirements for the monitoring of vehicles used to transport children. 
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  Department of Health and Human Services Office of Inspector General 
Semiannual Report to CongressApril 1, 2017, through September 30, 2017
 
 
 
Low-Income Home Energy Assistance Program 
Three Affiliated Tribes Improperly Spent Low Income Home Energy Assistance Program Funds 
for FYs 20102014 (A-07-16-04230), July 2017, and 
The Turtle Mountain Band of Chippewa Indians Improperly Administered Some Low-Income 
Home Energy Assistance Program Funds for Fiscal Years 2010 through 2013 (A-07-16-04233), 
September 2017  
The Three Affiliated Tribes (TAT) and the Turtle Mountain Band of Chippewa Indians (TMT) 
are both federally recognized American Indian tribes, located in North Dakota, that receive 
HHS grant funds from several sources, including LIHEAP.  ACF administers LIHEAP for HHS.  
In FYs 2010 through 2014 (TAT) and FYs 2010 through 2013 (TMT), the tribes did not 
administer LIHEAP grant funds in compliance with Federal laws, regulations, and guidance: 
$1.2 million for TAT and $587,248 for TMT.  Also, TMT could not determine whether an 
additional $96,932 was subject to repayment. 
TAT and TMT did not directly agree or disagree with our recommendations that they 
refund to the Federal Government $1.2 million and $587,248, respectively, for unallowable 
or unsupported grant funds and develop and implement policies and procedures to 
address internal control deficiencies. 
TAT did not directly agree or disagree with our recommendation that it formalize its 
definition of income in ways that conform to Federal requirements and guidelines and train 
staff to understand that applicants who are homeless do not qualify for crisis assistance for 
lodging. 
TMT did not directly agree or disagree with our recommendation that it determine how 
much of the $96,932 that energy suppliers returned to the tribe should be repaid to the 
Federal Government.   
 
Disaster Response and Recovery 
Economic Opportunity Commission of Nassau County, Inc., Claimed Some Unallowable 
Hurricane Sandy Disaster Relief Act Fund (A-02-15-02009), April 2017 
HHS had approximately $800 million in funding for disaster response and recovery and 
other expenses directly related to Hurricane Sandy.  Of this amount, ACF received $577.2 
million, of which $95 million was allocated to assist Head Start and Early Head Start 
grantees with program response, recovery, and other activities related to the impact of 
Hurricane Sandy.  ACF awarded $8.1 million of these funds to the Economic Opportunity 
Commission of Nassau County, Inc. (EOC), for construction and other expenses resulting 
from Hurricane Sandy. 
EOC claimed costs that did not comply with Federal requirements.  Of the $3.6 million in 
costs that we reviewed, $3 million complied with applicable Federal requirements.  
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  Department of Health and Human Services Office of Inspector General 
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However, EOC claimed $614,278 in unallowable costs because it (1) claimed construction 
costs, salaries, and fringe benefits on the basis of budgeted, not actual, costs; (2) claimed 
construction management and design costs that were not allocable to the grant; and (3) 
claimed costs that had been separately reimbursed by insurance.   
ACF partially concurred with our recommendation that it ensure that EOC refund $614,278 
to the Federal Government for costs that did not comply with Federal requirements.    
ACF concurred with our recommendation that it ensure that the $1.1 million in costs 
associated with EOCs ongoing work that we did not review complies with Federal 
requirements. 
 
Child Support Enforcement Activities 
OIG Investigations   
OIG investigates noncustodial parents who violate 18 U.S.C.  228 by failing to pay court-
ordered child support.  OIG works with ACFs Office of Child Support Enforcement; DOJ; 
U.S. Attorneys Offices; the U.S. Marshals Service; and Federal, State, and local partners to 
address egregious child support enforcement cases with appropriate law enforcement and 
prosecutorial action.  During this semiannual reporting period, OIG investigations of child 
support enforcement cases nationwide resulted in nine criminal actions and court-ordered 
restitution and settlements of $445,970.  
The following are examples of child support enforcement cases. 
FloridaIn 2000, Khanh Hung Nguyen was ordered to pay $429.00 per month for the 
support of his child.  Nguyen only occasionally made payments to the custodial parent of 
his child, and last made a payment in 2008.  Nguyen was sentenced to 3 years of probation 
and ordered to pay restitution of $82,225.13 after pleading guilty to failure to pay legal 
child support obligations. 
South DakotaIn 2008, Charles Lee VanWardhuizen was ordered to pay $585.94 per 
month for the support of his child.  This amount of ordered support was later raised to 
$591.57 in 2009.  VanWardhuizen only occasionally made payments to the custodial parent 
of his child.  VanWardhuizen was sentenced to 2 years of probation and ordered to pay 
restitution of $31,184.01 after pleading guilty to failure to pay legal child support 
obligations. 
Engaging the Public in Capturing Deadbeat Parents 
Because of the success of OIGs Most Wanted Fugitives website, OIG launched its Most 
Wanted Deadbeat Parents website.  The site identifies parents who fail to pay court-
ordered child support for their children and thereby put an unnecessary strain on the 
custodial parents and the children as well as on agencies that enforce these matters.  The 
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  Department of Health and Human Services Office of Inspector General 
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site, which is updated frequently, includes information on OIGs role in pursuing parents 
who fail to pay court-ordered child support.  OIGs Most Wanted Deadbeat Parents website 
can be found at https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.   
 
   
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  Department of Health and Human Services Office of Inspector General 
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Other HHS-Related Reviews and Investigations 
Grants and Contracts 
HHS is the largest grant-making organization and one of the largest contracting agencies 
in the Federal Government.  In FY 2017, HHS awarded more than $481 billion in grants and 
over $24 billion in contracts across all program areas.  OIGs direct annual discretionary 
appropriation funding is used to conduct program integrity and enforcement activities with 
regard to the more than 100 public health and human services programs carried out by 
more than 70,000 employees around the world.  The size and scope of departmental 
awards make their operating effectiveness crucial to the success of programs designed to 
improve the health and well-being of the public.  
Reviews 
Human Subjects Protections 
OHRP Should Inform Potential Complainants of How They Can Seek Whistleblower 
Protections (OEI-01-15-00351), September 2017 
We found that fear of reprisal may prevent potential complainants from disclosing 
allegations of noncompliance to the Office for Human Research Protections (OHRP).  This 
raises concerns that some instances of noncompliance may go unreported and unresolved.  
Although whistleblower protections are not available for complainants who make 
disclosures of noncompliance only to OHRP, protections may be available if complainants 
disclose such noncompliance to other entities, such as OIG or the HHS grant-awarding 
agency.  The Office of the Assistant Secretary for Health (OASH) concurred with all of our 
recommendations, which were for OHRP to:  
  inform potential complainants of how they can seek whistleblower protections and 
  request that HHS consider the adequacy of whistleblower protections for 
complainants making disclosures about human subjects protections to OHRP.  
 
OHRP Generally Conducted Its Compliance Activities Independently, But Changes Would 
Strengthen Its Independence (OEI-01-15-00350), July 2017 
We found that OHRP appeared to carry out its compliance activities for protecting human 
subjects in HHS-funded research while maintaining its independence from the HHS 
agencies that fund the research and the institutions conducting the research.  However, 
certain factors may limit or appear to limit OHRPs ability to operate independently.  OASH 
provided HHSs response and neither concurred nor nonconcurred with our 
recommendation that HHS should address factors that may limit OHRPs ability to operate 
independently.  OASH said that HHS would consider our recommendation as part of a 
comprehensive review of HHSs structure and functions that is currently underway and may 
identify revisions to OHRPs organizational location, mission, and budget.  OHRP concurred 
with our recommendation to post the following on its website: (1) a description of its 
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  Department of Health and Human Services Office of Inspector General 
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approach to oversight and (2) data (in aggregate) on the full array of its compliance 
activities. 
 
2016 Performance Data for the Senior Medicare Patrol Projects (OEI-02-17-00220), June 
2017 
The Senior Medicare Patrol projects receive grants from ACL to recruit and train retired 
professionals and other senior citizens to prevent, recognize, and report health care fraud, 
errors, and abuse.  In 2016, the 53 Senior Medicare Patrol projects had a total of 6,126 total 
active team members who conducted a total of 26,220 group outreach and education 
events, reaching an estimated 1.5 million people.  The projects reported $163,904 in cost 
avoidance on behalf of Medicare, Medicaid, beneficiaries, and others.  Savings to 
beneficiaries and others totaled $53,449.  Expected Medicare recoveries totaled $2,672.  
 
Grant Fraud Investigations 
The Program Support Center Did Not Identify and Report HHS Antideficiency Act 
Violations (A-03-13-03002), May 2017 
During our audit period (October 2011 through March 2013), PSC, a component of HHS, 
awarded or modified 216 contracts that had an estimated contract value that exceeded $5 
million each.  We randomly selected 30 of these contracts, totaling $498.3 million, for 
review.  The PSC did not always obligate and expend funds for 13 of the 30 contracts we 
reviewed in accordance with appropriations law and Federal acquisition requirements, 
resulting in unreported Antideficiency Act obligation violations totaling $20.3 million and 
expenditure violations totaling $29.2 million.  For 4 of the 30 contracts reviewed, the PSC 
incorrectly extended the period of performance and the fiscal year funding beyond its 12-
month period of availability.  In addition, the PSC did not always submit contracts to the 
appropriate offices for appropriations funding reviews before awarding the contracts.   
The PSC generally agreed with our recommendations that it work with the HHS Office of 
the Secretary to report Antideficiency Act obligation violations totaling $20.3 million and 
Antideficiency Act expenditure violations totaling $29.2 million and that it make procedural 
changes that should help prevent violations of the Antideficiency Act and the Federal 
Acquisition Regulation in the future. 
The following are case examples related to misuse of grant funds.  
MassachusettsBrigham and Womens Hospital, a subsidiary of Partners HealthCare 
System, Inc. (collectively, BWH), entered into a settlement agreement to resolve allegations 
that a BWH stem cell research laboratory fraudulently obtained grant funding from NIH.  
The settlement resolves allegations that Dr. Piero Anversa, along with Dr. Annarosa Leri and 
Dr. Jan Kajstura, knew or should have known that their laboratory promulgated and relied 
upon manipulated and falsified information in applications submitted for NIH research 
grant awards concerning the purported ability of stem cells to repair damage to the heart.  
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  Department of Health and Human Services Office of Inspector General 
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The Government alleged that problems with the work of the laboratory included improper 
protocols, invalid and inaccurately characterized cardiac stem cells, reckless or deliberately 
misleading recordkeeping, and discrepancies and/or fabrication of data and images 
included in applications and publications.  The Government contends that, at the direction 
of these BWH scientists, the laboratory included false scientific information in claims to NIH 
to obtain and use funds from NIH grants.  BWH agreed to pay $10 million to resolve their 
liability under the FCA. 
South CarolinaJian Yun Dong was the president and CEO of Genphar, Inc., and owner of 
Vaxima, Inc., federally funded research laboratories.  The investigation disclosed that Dong 
founded Genphar and Vaxima to perform research and produce a vaccine for diseases such 
as Ebola, Marburg, and dengue.  From August 2004 through April 2011, Federal grant 
money (including a cooperative agreement and Small Business Innovative Research funds) 
was obtained by Genphar and Vaxima for biodefense research and vaccine development 
but was used for other purposes, including the construction of a commercial office building 
and to pay lobbyists and others who were seeking to secure more Federal funding for the 
defendants.  Approximately $3 million was diverted from federally funded research into the 
construction of the facility.  A jury found Dong guilty of 24 counts and sentenced him to 5 
years and 10 months in prison and ordered him to pay $3.2 million in restitution.  Genphar, 
Inc., and Vaxima, Inc., were sentenced to pay a fine of $6.4 million each.  
Small Business Innovative Research Program  
The National Defense Authorization Act for Fiscal Year 2012,  5143, requires OIG to 
annually report on the number of cases that were referred with relation to fraud, waste, or 
abuse in the Small Business Innovative Research/Small Business Technology Transfer 
(SBIR/STTR) program.  OIG must also report on the actions taken in each case; justification 
for not taking action on a case; and an accounting of funds used to address waste, fraud, 
and abuse in this program.  In our December 2016 report delivered to the three 
congressional oversight committees, we reported that OIG spent approximately $151,182 in 
salaries on oversight related to the SBIR/STTR program.  In FY 2017, 6 new SBIR/STTR cases 
were referred to OIG. 
   
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  Department of Health and Human Services Office of Inspector General 
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Recovery Act Retaliation Complaint Investigations 
The Recovery Act,  1553, prohibits non-Federal employers that have received Recovery Act 
funding from retaliating against employees who disclose evidence of mismanagement of 
Recovery Act funds or any violation of law related to Recovery Act funds.  OIGs are 
required to include in their Semiannual Report the retaliation complaint investigations that 
they decided not to conduct or continue during the reporting period.  During this reporting 
period, OIG did not close any investigations.  
Contract Audits 
Pursuant to the National Defense Authorization Act for FY 2008,  845, OIGs appointed 
under the Inspector General Act of 1978 are required to submit, as part of their semiannual 
report, pursuant to section 5 of the Inspector General Act, information on final completed 
contract audit reports issued to the contracting activity during the period.  This 
information must contain significant audit findings.  OIG issued no final reports meeting  
845 criteria during this semiannual period.   
OIG Reviews of Non-Federal Audits  
OIG reviews audits conducted by non-Federal auditors of entities receiving Federal awards.  
During this semiannual reporting period, OIGs National External Audit Review Center 
reviewed 552 reports covering $2.2 trillion in audited costs.  Federal dollars covered by 
these audits totaled $697.8 billion, of which about $365.1 billion were HHS funds.   
The regulation at 45 CFR, subpart F, establishes audit requirements for certain State and 
local governments, colleges and universities, and nonprofit organizations receiving HHS 
awards.  Entities subject to part 75s single-audit requirements must conduct annual 
organization-wide single audits.  These audits are conducted by non-Federal auditors, 
such as public accounting firms and State auditors.  OIG reviews the quality of these audits 
and assesses the adequacy of the entities management of Federal funds.   
OIGs oversight of non-Federal audit activity informs Federal managers about the 
soundness of management of Federal programs and identifies any significant areas of 
internal control weakness, noncompliance, and questioned costs for resolution or followup.  
We identify entities for high-risk monitoring, alert program officials to any trends that could 
indicate problems in HHS programs, and profile non-Federal audit findings of a particular 
program or activity over time to identify systemic problems.  We also provide training and 
technical assistance to grantees and members of the auditing profession.  OIG maintains a 
process to assess the quality of the non-Federal reports received and the audit work that 
supports the selected reports.   
OIGs reports on non-Federal audits reviewed during this reporting period are categorized 
in the following table. 
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  Department of Health and Human Services Office of Inspector General 
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Non-Federal Audits, April 1, 2017, through September 30, 2017 
Number of Non-Federal Audits:   
Not requiring changes or having  516 
minor changes  
Requiring major changes  26 
Having significant technical  10 
inadequacies 
Total  552 
The 552 reports included 1,962 recommendations for improving management operations.  
In addition, these audit reports provided information for 16 OIG special memorandums that 
 
identified concerns for increased monitoring by management.
Other Reporting Requirements and Reviews  
Legislative and Regulatory Reviews  
Pursuant to the Inspector General Act,  4(a)(2), OIG is required to review existing and 
proposed legislation and regulations relating to HHSs programs and operations and make 
recommendations concerning their impact on economy and efficiency or the prevention 
and detection of fraud and abuse.  Most audits and other reviews that we conduct are 
designed to test compliance with and/or assess the administration and oversight of existing 
laws and regulations.  Our reports of such reviews describe findings, which include 
questioned costs, inefficiencies, vulnerabilities to fraud, inconsistencies, errors in 
application, or weaknesses in oversight or supporting systems.  Our corresponding 
recommendations tell HHS and its operating or staff divisions what administrative, 
regulatory, or legislative actions we believe are needed to effectively respond to the 
findings.  Our regularly published core publications reflect the relationship between our 
work and laws and regulations. 
  Our Semiannual Report to Congress describes findings and recommendations from 
recently completed reviews, many of which focus on existing laws and regulations.   
  Our Compendium of Unimplemented Recommendations describes priority findings 
and recommendations from past periods that remain to be implemented.   
  Our Work Plan provides citations to laws and regulations that are the subject of 
ongoing or future reviews. 
We also review proposed legislation and regulations related to HHS programs and 
operations.  HHS routinely involves OIG and HHS operating divisions and other HHS staff 
divisions in the review and development of HHS regulations through a well-established 
HHS process.  Our audits, evaluations, and investigations are sometimes cited in regulatory 
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preambles as influencing HHS regulations.  In addition, we provide independent, objective 
technical assistance on a bipartisan, bicameral basis to congressional committees and 
members who request it.  
Health Insurance Marketplaces   
Key focus areas for our oversight of the Health Insurance Marketplaces include payment 
accuracy, eligibility, management and administration, and security.  In developing our work 
plan, we coordinate with GAO and other Federal and State oversight agencies.   
Initial Review of the Centers for Medicare & Medicaid Services Automated System for 
Processing Financial Assistance Payments (A-02-17-02001), May 2017 
The House Committee on Energy and Commerces Subcommittee on Oversight and 
Investigations and Subcommittee on Health requested that the HHS OIG provide 
information regarding CMSs automated system for processing financial assistance 
payments (e.g., advance premium tax credits and cost-sharing reductions).  This briefing 
document presents our initial review of the design and implementation of CMSs 
automated system from May through October 2016.  As of May 2016, CMS had fully 
implemented the automated system for the Federal marketplace and planned to fully 
transition issuers operating through State marketplaces to the automated system in 2018.  
 
CMS Did Not Provide Effective Oversight To Ensure That State Marketplaces Always 
Properly Determined Individuals Eligibility for Health Plans and Insurance Affordability 
Programs (A-09-16-01002), September 2017  
Our prior reviews of seven State marketplaces found that not all were effective in ensuring 
that individuals were properly determined eligible for qualified health plans (QHPs) and 
insurance affordability programs.  CMS did not ensure that all State marketplaces had the 
system functionality to verify individuals eligibility for QHPs and insurance affordability 
programs and resolve inconsistencies in eligibility data according to Federal requirements, 
had or used the system functionality to perform the process for determining ineligibility for 
individuals who had not filed a tax return to reconcile the premium tax credit, and 
completed required independent audits.  We also identified three weaknesses in CMSs 
procedures for SMART reviews.  (The SMARTState Marketplace Annual Reporting Tool
is a reporting document that State marketplaces must submit annually to CMS to 
demonstrate that they meet program integrity standards.)   
CMS did not concur with our recommendations that it set firm deadlines for marketplaces 
to fully develop system functionality for verifying applicants eligibility and resolving 
inconsistencies, assess potential enforcement mechanisms that would ensure that 
marketplaces meet those deadlines, and, if such mechanisms are identified, seek legislative 
authority to establish them. 
CMS did not state whether it concurred with our recommendation that it require 
marketplaces to submit additional data elements. 
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CMS concurred with our recommendations that it monitor marketplaces progress in 
developing and using current and future system functionality; ensure that marketplaces 
complete required independent programmatic audits annually; complete its review of 
SMART documentation; and continue to work with marketplaces to develop the reporting 
capability to ensure that all required data elements are submitted.  
 
CMS Oversight Must Continue Because All Remaining Consumer Operated and Oriented 
Plans Were Not Profitable and May Not Be Viable and Sustainable (A-05-16-00027), 
August 2017  
The ACA authorized the Secretary of HHS to make startup and solvency loans to new 
consumer-governed, nonprofit health insurance issuers, known as Consumer Operated and 
Oriented Plans (CO-OPs).  In 2015 and 2016, CMS placed 10 of the 11 CO-OPs on a 
corrective action plan or an enhanced oversight plan because of financial, operational, or 
market strategy concerns.  CMS conducted the required oversight of the CO-OP program, 
but this did not prevent the CO-OPs from ceasing or planning to cease operations.   
Five of the eleven CO-OPs operating on January 1, 2016, had ceased or planned to cease 
operations by the end of the 2016 plan year, and each of the remaining six CO-OPs 
reported net losses, had drawn down nearly all available CO-OP loan amounts as of 
December 31, 2016, and did not appear to be financially viable and sustainable based on 
the reported net income and available capital and surplus.  When a CO-OP ceases 
operations during the plan year, health plan participants can be significantly affected.   
CMS agreed with our recommendations that it (1) continue to work with operational CO-
OPs to improve their financial condition; (2) continue the use of corrective action and 
enhanced oversight plans, especially for those CO-OPs with net losses and no remaining 
CO-OP loan funds to be drawn down; and (3) continue to work with States to ensure that 
CO-OP plan participants receive continuous coverage and access to plan providers and 
services. 
 
Information Security 
These summaries do not include details of the vulnerabilities that we identified because of 
the sensitive nature of the information.   
Public Summary Report: Information Technology Control Weaknesses Found in the New 
Mexico Human Services Departments Medicaid Eligibility Systems (A-06-16-05000), 
August 2017 
New Mexico had not adequately secured its Medicaid data and information systems in 
accordance with Federal requirements.  Although New Mexico adopted a security program 
for its eligibility systems, we identified system vulnerabilities that potentially placed New 
Mexicos operations at risk.  Although we did not identify evidence that the vulnerabilities 
had been exploited, exploitation could have resulted in unauthorized access to, and 
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disclosure of, sensitive information, as well as in disruption of New Mexicos critical 
operations.  As a result, the vulnerabilities were collectively and, in some cases, individually 
significant and could have potentially compromised the confidentiality, integrity, and 
availability of New Mexicos eligibility systems.  
New Mexico concurred with our findings and most of our recommendations that it 
implement our detailed recommendations to address the findings we identified in its 
eligibility system security program, but it did not concur with one recommendation.   
 
Public Summary Report: The State of North Carolina Did Not Ensure That Federal 
Information System Security Requirements Were Met for Safeguarding Its Medicaid 
Claims Processing Systems and Data (A-07-16-00469), August 2017 
North Carolina had not ensured that CSRA, Inc., which operates North Carolinas Medicaid 
claims processing systems, implemented adequate information system general controls 
over the North Carolina Medicaid claims processing systems in accordance with Federal 
requirements.  The vulnerabilities that we identified increased the risk to the confidentiality, 
integrity, and availability of North Carolinas Medicaid data.   
Although we did not identify evidence that the vulnerabilities had been exploited, 
exploitation could result in unauthorized access to and disclosure of sensitive information, 
as well as disruption of critical North Carolina Medicaid operations.  As a result, the 
vulnerabilities are collectively and, in some cases, individually significant and could 
potentially compromise the confidentiality, integrity, or availability of North Carolinas 
Medicaid claims processing data and systems.  In addition, without proper safeguards, 
systems are not protected from individuals and groups with malicious intent to obtain 
access in order to commit fraud or abuse or launch attacks against other computer systems 
and networks. 
North Carolina concurred with our recommendations that it improve the protection of 
sensitive data on its Medicaid claims processing systems by working with CSRA to address 
the vulnerabilities identified during our audit to ensure compliance with Federal 
requirements.  
 
Public Summary Report: Virginia Did Not Adequately Secure Its Medicaid Data (A-04-15-
05066), May 2017 
Virginia did not adequately secure its Medicaid data and information systems in 
accordance with Federal requirements.  Although Virginia had adopted a security program 
for its Medicaid Management Information System, numerous significant system 
vulnerabilities remained because Virginia neither implemented sufficient controls over its 
Medicaid data and information systems nor provided sufficient oversight to ensure that its 
contractor implemented contract security requirements.  Although we did not identify 
evidence that anyone had exploited these vulnerabilities, exploitation could have resulted in 
unauthorized access to and disclosure of Medicaid beneficiary data, as well as the 
disruption of critical Medicaid operations.  These vulnerabilities were collectively and, in 
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some cases, individually significant and could have compromised the integrity of Virginias 
Medicaid program. 
Virginia concurred with our recommendations that it improve its Medicaid security 
program to secure Medicaid data and information systems in accordance with Federal 
requirements, provide adequate oversight to its contractor, and address the vulnerabilities 
identified during our audit.   
 
Alabama Did Not Adequately Secure Its Medicaid Data and Information Systems (A-04-
15-05065), September 2017 
Alabama did not adequately secure its Medicaid data and information systems in 
accordance with Federal requirements.  Although Alabama had adopted a security 
program for its Medicaid Management Information System, numerous significant system 
vulnerabilities remained because Alabama neither implemented sufficient controls over its 
Medicaid data and information systems nor provided sufficient oversight to ensure that HP, 
Alabamas Medicaid fiscal agent, implemented contract security requirements.  Although 
we did not identify evidence that anyone had exploited these vulnerabilities, exploitation 
could have resulted in unauthorized access to and disclosure of Medicaid data, as well as 
the disruption of critical Medicaid operations.  These vulnerabilities were collectively and, in 
some cases, individually significant and could have compromised the integrity of Alabamas 
Medicaid program. 
Alabama concurred with our recommendations that it improve its Medicaid security 
program to secure Medicaid data and information systems in accordance with Federal 
requirements, provide adequate oversight to its contractors, and address the vulnerabilities 
identified during our audit.   
 
Readiness of CDCs Strategic National Stockpile Could Be at Risk in Case of a Public 
Health Emergency (A-04-16-03554), July 2017 
The Strategic National Stockpile (Stockpile) is a repository of vaccines, antibiotics, antidotes, 
antitoxins, medications, and supplies, in addition to certain controlled substances, meant to 
supplement and resupply State and local public health agencies in the event of a national 
emergency.  Two primary systemic issues may prevent CDC from ensuring that Stockpile 
sites are adequately protected and that inventory is readily deployable in a public health 
emergency: although CDCs Division of Strategic National Stockpile (DSNS) is no longer 
responsible for providing Stockpile security, DSNS still controls security funding, and the 
Stockpile automated inventory system did not always accurately track the movement of all 
inventory or accurately record inventory locations.     
These systemic issues could place at risk approximately $7 billion of Stockpile inventory and 
negatively affect Stockpile readiness during a national emergency. 
CDC concurred with our recommendations that it consider directly funding the Stockpile 
security mission of CDCs Office of Safety, Security, and Asset Management and improve its 
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automated inventory system so that it can accurately identify inventory movements and 
locations at all times.  
 
   
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Appendix A: Questioned Costs and Funds To Be 
Put to Better Use 
The following tables summarize OIGs monetary recommendations and HHS responses to 
them.  This information is provided in accordance with the Inspector General Act,  5(a)(8) 
and (a)(9) (5 U.S.C. App.  5(a)(8) and (a)(9)), and the Supplemental Appropriations and 
Rescissions Act of 1980.   
Audit Reports with Questioned Costs 
 
As defined by the IG Act, the term questioned cost means a cost that is questioned by the 
OIG because of (1) an alleged violation of a provision of law, regulation, contract, grant, 
cooperative agreement, or other agreement or document governing the expenditure of 
funds; (2) a cost that is not supported by adequate documentation at the time of the audit; 
or (3) the expenditure of funds for the intended purpose is unnecessary or 
unreasonable.  Questioned costs that HHS program officials have, in a management 
decision, sustained or agreed should not be charged to the Government are disallowed 
costs.  Superscripts indicate end notes that follow the tables below. 
 
 
   
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Table 1 
  Dollar Value  Dollar Value 
Reports  Questioned  Unsupported 
Section 1       
Reports for which no management decisions had been  151  $605,454,000  $18,196,000 
made by the beginning of the reporting period1 
Reports issued during the reporting period  49  $240,582,000  $596,000 
  Total Section 1  200  $846,036,000  $18,792,000 
 
Section 2       
Reports for which management decisions were made       
during the reporting period2, 3  
  Disallowed costs  116  $296,434,000     $0 
  Costs not disallowed  5               $38,032,000  $0 
  Total Section 2  121  $334,466,000  $0 
*Audit receivables (expected recoveries).       
 
Section 3       
Reports for which no management decisions had been  79  $511,570,000  $18,792,000 
made by the end of the reporting period  
(Section 1 minus Section 2) 
 
Section 4        
Reports for which no management decisions were made  53  $363,497,000  $18,195,000 
within 6 months of issuance4 
       
Audit Reports With Funds Recommended To Be Put to Better Use  
The phrase recommendations that funds be put to better use means that funds could be 
used more efficiently if management took action to implement an OIG recommendation 
through reductions in outlays, deobligation of funds, and/or avoidance of unnecessary 
expenditures.  Table 2 reports HHS program officials decisions to take action on these 
audit recommendations.   
 
   
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Table 2 
  Reports  Dollar Value 
Section 1     
Reports for which no management decisions had been made by the beginning  8  $15,439,476,000 
of the reporting period1 
Reports issued during the reporting period  5  $2,392,492,000 
  Total Section 1  13  $17,831,968,000 
     
Section 2     
Reports for which management decisions were made during the reporting     
period 
Value of recommendations agreed to      
by management 
  Based on proposed management action  3  $20,264,000 
  Based on proposed legislative action  0  0 
     
Value of recommendations not agreed to by management  1  $50,728,000 
  Total Section 2  4  $70,992,000 
     
Section 3     
Reports for which no management decisions had been made by the end of  9  $17,760,976,000 
the reporting period2 (Section 1 minus Section 2) 
 
End Notes 
Table 1 End Notes 
1 The opening balance was adjusted upward by $57.5 million because of a reevaluation of previously issued 
recommendations.  
2 Revisions to previously reported management decisions: 
  A-05-11-00016 National Government Services, Inc., Did Not Always Refer Medicare Cost Reports and Reconcile 
Outlier Payments.  
Based on subsequent review, CMS determined that no reconciliation or recoupment would be completed and 
that the $51,513,196 would be allowable cost. 
  A-02-09-01017 The New Jersey Department of Human Services Claimed Medicaid Disproportionate Share 
Hospital payments to Five Hospitals That Did Not Meet Federal Eligibility Requirements.   
Based on the HHS Departmental Appeals Board decision, CMS reviewed the questioned cost totaling 
$50,063,977 and determined that $45,011,013 was allowable cost, reducing disallowed cost to $5,052,964. 
  A-05-12-00057 Hoveround Corporation Claimed Millions in Federal Reimbursement for Power Mobility Devices 
That did not Meet Medicare Requirements. 
Subsequent review by CMS determined that $12,296,045 in overpayments were allowable cost, reducing 
disallowed cost to $14,731,534. 
  A-01-13-00506 Incorrect Place-of-Service Coding Resulted in Potential Medicare Overpayments Costing Millions. 
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Based on subsequent review of supporting documentation, CMS determined that the $7.1 million in 
questioned costs was allowable.    
  Not detailed are reductions to previously disallowed management decisions totaling $14 million.   
 
3 Included are management decisions to disallow $27.7 million in questioned costs that were identified by non-Federal 
auditors in audits of State and local governments, colleges and universities, and nonprofit organizations receiving Federal 
awards conducted in accordance with Office of Management and Budget Circular A-133.  OIG is currently ensuring that 
work performed by these non-Federal auditors complies with Federal audit standards; accordingly, OIG tracks, resolves, 
and reports on recommendations in these audits. 
4 Because of administrative delays, some of which were beyond management control, resolution of the following 53 
audits were not completed within 6 months of issuance of the reports; however, agency management has informed us 
that the agency is working to resolve the outstanding recommendations before the end of the next semiannual reporting 
period: 
CIN: A-02-14-02017  NEW YORK MISALLOCATED COSTS TO ESTABLISHMENT GRANTS FOR A HEALTH 
INSURANCE MARKETPLACE, NOV 2016, $149,654,512 
CIN: A-01-02-00006  REVIEW OF RATE SETTING METHODOLOGY MEDICAID SCHOOL-BASED CHILD HEALTH 
PROGRAM COSTS CLAIMED BY THE CONNECTICUT DEPARTMENT OF SOCIAL SERVICES 
JULY 1997 THROUGH JUNE 2001, MAY 2003, $32,780,146 
CIN: A-01-14-02503  MARYLAND MISALLOCATED MILLIONS TO ESTABLISHMENT GRANTS FOR A HEALTH 
INSURANCE MARKETPLACE, MAR 2015, $28,400,000 
CIN: A-07-13-01125  MEDICARE IMPROPERLY PAID MEDICARE ADVANTAGE ORGANIZATIONS MILLIONS OF 
DOLLARS FOR UNLAWFULLY PRESENT BENEFICIARIES FOR 2010 THROUGH 2012, APR 
2014, $26,150,043 
CIN: A-04-14-07050  KENTUCKY ESTABLISHMENT GRANTS AUDIT, FEB 2017, $25,530,429 
CIN: A-02-12-02016  PUERTO RICO IMPROPERLY CLAIMED SOME CHILD CARE AND DEVELOPMENT TARGETED 
FUNDS, JAN 2016, $12,471,385 
CIN: A-01-15-02500  VERMONT DID NOT PROPERLY ALLOCATE MILLIONS TO ESTABLISHMENT GRANTS FOR A 
HEALTH INSURANCE MARKETPLACE, SEP 2016, $11,243,006 
CIN: A-02-14-02024  NEWARK PRESCHOOL COUNCIL, INC., DID NOT ALWAYS COMPLY WITH HEAD START 
REQUIREMENTS, FEB 2017, $9,950,556 
CIN: A-07-15-01159  MEDICARE IMPROPERLY PAID MILLIONS OF DOLLARS FOR UNLAWFULLY PRESENT 
BENEFICIARIES FOR 2013 AND 2014, SEP 2016, $9,267,392 
CIN: A-07-14-02801  COLORADO HEALTH EXCHANGE ESTABLISHMENT GRANT, DEC 2016, $4,398,333 
CIN: A-03-12-00004  REVIEW OF HORIZON'S 2009 AND 2010 BONA FIDE SERVICE FEES, MAR 2013, $4,344,417 
CIN: A-02-12-02012  NEW YORK IMPROPERLY CLAIMED SOME CHILD CARE AND DEVELOPMENT TARGETED 
FUNDS, JUL 2015, $3,827,836 
CIN: A-02-14-02012  VISITING NURSE SERVICE OF NEW YORK BUDGETED COSTS THAT WERE NOT 
APPROPRIATE AND CLAIMED SOME UNALLOWABLE HURRICANE SANDY DISASTER RELIEF 
ACT FUNDS, NOV 2016, $3,771,672 
CIN: A-05-13-00014  OHIO EXCEEDED THE 5-PERCENT LIMIT FOR CLAIMING CHILD CARE DEVELOPMENT 
FUND ADMINISTRATIVE EXPENDITURES, NOV 2013, $3,164,630 
CIN: A-03-13-00024  REVIEW OF NEW ORLEANS REGIONAL PHYSICIAN HOSPITAL ORGANIZATION, INC.'S 
2009, 2010, AND 2011 BONA FIDE SERVICE FEES, APR 2014, $2,880,698 
CIN: A-03-13-00025  REVIEW OF UAB HEALTH SYSTEM'S 2009, 2010, AND 2011 BONA FIDE SERVICE FEES, JAN 
2014, $2,812,109 
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CIN: A-03-13-00026  REVIEW OF USABLE MUTUAL'S (ARKANSAS BLUE CROSS BLUE SHIELD) 2009, 2010, AND 
2011 BONA FIDA SERVICE FEES, JAN 2014, $2,763,821 
CIN: A-03-11-00002  REVIEW OF NEW ENGLAND JOINT ENTERPRISE 2009 DIR REPORTS, APR 2012, $2,710,732 
CIN: A-03-12-00006  REVIEW OF TAHMO'S 2009 AND 2010 BONA FIDE SERVICE FEES, MAR 2013, $2,355,532 
CIN: A-03-13-00020  REVIEW OF CAPITAL DISTRICT PHYSICIANS' HEALTH PLAN, INC.'S 2009, 2010, AND 2011 
BONA FIDE SERVICE FEES, JAN 2014, $2,070,605 
CIN: A-03-12-00007  REVIEW OF ARCADIAN'S 2009 AND 2010 BONA FIDE SERVICE FEES, FEB 2013, $2,048,967 
CIN: A-03-12-00005  REVIEW OF WINDSOR'S 2009 AND 2010 BONA FIDE SERVICE FEES, JAN 2013, $1,948,737 
CIN: A-03-13-00018  REVIEW OF AMERIGROUP CORPORATION'S 2009, 2010, AND 2011 BONA FIDE SERVICE 
FEES, JAN 2014, $1,943,251 
CIN: A-03-13-00019  REVIEW OF BLUECROSS BLUESHIELD OF SOUTH CAROLINA'S 2009, 2010, AND 2011 BONA 
FIDE SERVICE FEES, DEC 2013, $1,799,096 
CIN: A-05-16-00014  REVIEW OF PHYSICIAN-ADMINISTERED DRUG REBATES AT WISCONSIN, MAR 2017, 
$1,732,222 
CIN: A-07-11-06013  THE UNIVERSITY OF COLORADO DENVER DID NOT ALWAYS CLAIM SELECTED COSTS 
CHARGED DIRECTLY TO DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARDS IN 
ACCORDANCE WITH FEDERAL REGULATIONS, JUN 2013, $1,419,524 
CIN: A-04-13-01022  COSTS NORMALLY TREATED AS ADMINISTRATIVE AND CLERICAL CHARGED DIRECTLY TO 
HHS AWARDS AT THE UNIVERSITY OF LOUISVILLE, DEC 2016, $1,311,067 
CIN: A-05-14-00045  REVIEW OF MN STATE AGENCY PROCESS FOR DESIGN & IMPLEMENTATION OF THE 
STATE'S HEALTH INSURANCE EXCHANGE, NOV 2016, $1,279,677 
CIN: A-03-13-00021  REVIEW OF FALLON COMMUNITY HEALTH PLAN'S 2009, 2010, AND 2011 BONA FIDE 
SERVICE FEES, JAN 2014, $1,079,578 
CIN: A-05-12-00089  THE COUNCIL ON RURAL SERVICE PROGRAMS, INC., CLAIMED UNALLOWABLE HEAD 
START COSTS, NOV 2013, $1,074,352 
CIN: A-03-13-00022  REVIEW OF MD CARE, INC.'S 2009, 2010, AND 2011 BONA FIDE SERVICE FEES, JAN 2014, 
$1,040,501 
CIN: A-03-13-00023  REVIEW OF NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION'S 2009, 2010, AND 
2011 BONA FIDE SERVICE FEES, JAN 2014, $957,921 
CIN: A-09-14-01007  NEVADA MISALLOCATED COSTS FOR ESTABLISHING A HEALTH INSURANCE 
MARKETPLACE TO ITS ESTABLISHMENT GRANTS, FEB 2016, $893,464 
CIN: A-04-15-04040  MEDICAL ACCESS UGANDA LIMITED GENERALLY MANAGED THE PRESIDENT'S 
EMERGENCY PLAN FOR AIDS RELIEF FUNDS IN ACCORDANCE WITH AWARD 
REQUIREMENTS, JUN 2016, $751,399 
CIN: A-09-11-01007  HAWAII CLAIMED UNALLOWABLE COMMUNITY SERVICES BLOCK GRANT COSTS FOR 
HONOLULU COMMUNITY ACTION PROGRAM, INC.'S EXPENDITURES UNDER THE 
RECOVERY ACT, FEB 2013, $513,649 
CIN: A-04-13-01024  THE UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL DID NOT ALWAYS CLAIM 
SELECTED COSTS CHARGED DIRECTLY TO DEPARTMENT OF HEALTH AND HUMAN 
SERVICES AWARDS IN ACCORDANCE WITH FEDERAL REQUIREMENTS, JUN 2014, $352,843 
CIN: A-02-15-02011  HURRICANE SANDY DISASTER RELIEF ACT FUNDS AWARDED TO THE CLEVELAND CLINIC 
LERNER COLLEGE OF MEDICINE, MAR 2017, $299,170 
CIN: A-01-10-02505  RESULTS OF LIMITED SCOPE REVIEW OF CTE, INC., MAY 2011, $293,870 
CIN: A-02-11-02015  PUERTO RICO CLAIMED UNALLOWABLE COMMUNITY SERVICES BLOCK GRANT 
RECOVERY ACT COSTS FOR INSTITUTO SOCIO-ECONOMICO, INC., APR 2013, $285,412 
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CIN: A-02-11-02017  NEW JERSEY CLAIMED UNALLOWABLE COMMUNITY SERVICES BLOCK GRANT COSTS 
INCURRED BY CHECK-MATE INC., UNDER THE RECOVERY ACT, AUG 2014, $246,359 
CIN: A-09-09-00045  RISK ADJUSTMENT DATA VALIDATION OF PAYMENTS MADE TO PACIFICARE OF 
CALIFORNIA FOR CALENDAR YEAR 2007 (CONTRACT H0543), NOV 2012, $224,388 
CIN: A-04-15-04039  REVIEW OF MILDMAY UGANDA COOPERATIVE AGREEMENT U2GPS002909 FOR FYS 2010-
2014, MAR 2017, $209,480 
CIN: A-05-12-00012  ROCKFORD HUMAN SERVICES DID NOT ALWAYS CHARGE ALLOWABLE COSTS TO THE 
COMMUNITY SERVICES BLOCK GRANT - RECOVERY ACT PROGRAM, JUL 2013, $205,296 
CIN: A-06-09-00012  RISK ADJUSTMENT DATA VALIDATION OF PAYMENTS MADE TO PACIFICARE OF TEXAS 
FOR CALENDAR YEAR 2007 (CONTRACT NUMBER H4590), MAY 2012, $183,247 
CIN: A-04-11-01004  NORTHEAST FLORIDA COMMUNITY ACTION AGENCY, INC.S CSBG FUNDS AWARDED 
UNDER THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009, SEP 2012, $165,795 
CIN: A-04-11-01008  CENTRAL FLORIDA COMMUNITY ACTION AGENCY, INC., DID NOT ALWAYS CHARGE 
ALLOWABLE COSTS TO THE COMMUNITY SERVICES BLOCK GRANT - RECOVERY ACT 
PROGRAM, APR 2013, $160,404 
CIN: A-07-11-02766  NOT ALL COMMUNITY SERVICES BLOCK GRANT COSTS CLAIMED ON BEHALF OF THE 
CARBON COUNTY COMMUNITY ACTION COMMITTEE FOR THE PERIOD OCTOBER 1, 2008, 
THROUGH SEPTEMBER 30, 2010, WERE ALLOWABLE, AUG 2013, $143,588 
CIN: A-09-11-01013  OREGON CLAIMED SOME POTENTIALLY UNALLOWABLE COMMUNITY SERVICES BLOCK 
GRANT COSTS FOR MULTNOMAH COUNTY'S EXPENDITURES UNDER THE RECOVERY ACT, 
APR 2013, $115,911 
CIN: A-06-11-00058  CROWLEY'S RIDGE DEVELOPMENT COUNCIL, INC., CLAIMED UNALLOWABLE COSTS 
UNDER A RECOVERY ACT GRANT, AUG 2012, $115,420 
CIN: A-02-13-02005  PUERTO RICO'S CONTROLS FOR ITS CHILD CARE AND DEVELOPMENT PROGRAM CLAIMS 
WERE NOT EFFECTIVE, JAN 2017, $82,544 
CIN: A-02-15-02005  NEW JERSEY CLAIMED SOME UNALLOWABLE COSTS UNDER A HURRICANE SANDY 
DISASTER RELIEF ACT GRANT, FEB 2017, $36,547 
CIN: A-09-11-01014  HAWAII CLAIMED UNALLOWABLE COMMUNITY SERVICES BLOCK GRANT COSTS FOR 
HAWAII COUNTY ECONOMIC OPPORTUNITY COUNCIL'S EXPENDITURES UNDER THE 
RECOVERY ACT, JUL 2012, $22,602 
CIN: A-05-11-00053  THE COLUMBUS URBAN LEAGUE CLAIMED SOME UNALLOWABLE COSTS TO HEAD 
START, SEP 2012, $13,102 
TOTAL CINS:    53 
TOTAL AMOUNT:  $363,497,000  
 
Table 2 End Notes 
1 The opening balance was adjusted upward by $34.5 million to reflect prior period adjustments of previously 
issued recommendations.  
2 Revisions to previously reported management decisions: 
  A-07-13-02795  Palmetto Government Benefits Administrator Did Not Always Refer Medicare Cost Reports and 
Reconcile Outlier Payments in Jurisdiction 1.  
Subsequent review by CMS determined that cost savings totaling $34,897,819 were outside the three year 
window for reopening.   
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3 Because of administrative delays, some of which were beyond management control, 4 of the 9 audits open at 
end of the period were not resolved within 6 months of issuance of reports.  OIG is working with management to 
reach resolution on these recommendations before the end of the next semiannual reporting period: 
 
CIN: A-05-12-00020   MEDICARE AND BENEFICIARIES COULD SAVE BILLIONS IF CMS REDUCES HOSPITAL 
OUTPATIENT DEPARTMENT PAYMENT RATES FOR AMBULATORY SURGICAL CENTER-
APPROVED PROCEDURES TO AMBULATORY SURGICAL CENTER PAYMENT RATES, APR 
2014, $15,000,000,000 
CIN: A-09-14-02033  NATIONWIDE REVIEW OF CHIROPRACTIC SERVICES, OCT 2016, $358,800,549 
CIN: A-01-13-00511  NATIONWIDE REVIEW OF CARDIAC CATHETERIZATIONS AND HEART BIOPSIES FOR 
CY2010 THRU 2012, MAR 2017, $7,629,229 
CIN: A-09-14-02037  MEDICARE DID NOT PAY SELECTED INPATIENT CLAIMS FOR BONE MARROW AND STEM 
CELL TRANSPLANT PROCEDURES IN ACCORDANCE WITH MEDICARE REQUIREMENTS, FEB 
2016, $2,054,306 
 
TOTAL CINS:  4 
TOTAL AMOUNT:  $15,368,484,000 
 
   
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Appendix B: Savings Decisions Supported by OIG 
Recommendations 
The table below lists policy decisions reflected in legislation, regulations, or other directives 
from prior years that are supported by OIG recommendations and for which cost savings 
were estimated, usually by third parties, such as the Congressional Budget Office (CBO) or 
HHS actuaries.  Of the savings estimated for the decisions below, nearly $24.4 billion was 
attributed to FY 2017.  This figure reflects the most recent available savings estimates issued 
by the third-party appraiser; actual savings may be higher or lower.   
After laws involving HHS programs are enacted, OIG analyzes the laws to identify the 
provisions that comport with our prior recommendations, that is, whether our 
recommendations support the decisions that were made.  A similar process occurs with 
administrative decisions in regulations or other directives or agreements, e.g., modifications 
to Medicaid State Plans.  Most of the decisions reported in this appendix reflect ways in 
which funds could be put to better use, such as reductions in Federal spending or the 
avoidance of unnecessary or inappropriate expenditures, or both.   
To quantify the value of administrative decisions, we use estimates developed by, or in 
consultation with, HHS operating or staff divisions.  To quantify the value of legislative 
decisions, we generally use estimates developed by CBO.  CBO projects the annual 
increases or reductions in Federal spending that it expects would result from enacting the 
legislation.  The policy decisions shown on the table beginning on the next page mirror not 
only OIGs recommendations but also the contributions of others, such as HHS staff and 
operating divisions, congressional committees, and the GAO.  
   
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Centers for Medicare & Medicaid Services Programs 
OIG Recommendations  Policy Decisions  Estimated 
Savings 
(millions) 
Medicare Part C Prepayments.   Section 3201 of the ACA changed the Medicare  $21,300  
Modify monthly capitated payments to a level fully  Advantage benchmark percentages that are applied 
supported by empirical data. The  to Medicare fee-for-service and imposed a cap on 
recommendation reflected findings in OIG report  the benchmarks, resulting in cost savings for 
number A-14-00-00212.   Medicare Part C as compared to prior law.  CBO 
estimated Part C savings through FY 2019, including 
$21.3 billion for FY 2017.  CBO produced its estimate 
in 2010, prior to two significant implementation 
decisions by HHS that affect the actual savings; 
however, neither CBO nor HHS has calculated a 
revised estimate. 
Excessive Medicaid Payments to New York  New Yorks Medicaid State Plan Amendment   $799 
Developmental Centers.    12-03, effective April 1, 2013, limits payment to costs 
Ensure that New Yorks Medicaid daily rate for  with projected annual savings of nearly $799 million. 
State-operated developmental centers meets the 
Federal requirement that payment for services be 
consistent with efficiency and economy.  The 
recommendation reflected findings in OIG report 
number A-02-11-01029. 
Part B Drugs Average Sales Price.    Section 112 of the Medicare, Medicaid, and State  $400 
Adopt an alternate calculation of volume- Childrens Health Insurance Program (SCHIP) 
weighted ASP that is consistent with the results set  Extension Act of 2007 establishes a revised method 
forth in section 1847A (b)(3) of the Social Security  for calculating volume-weighted ASPs for Medicare 
Act.  The recommendation reflected findings in  Part B drugs that comports with OIGs 
OIG report number OEI-03-05-00310.  recommendation.  CBO estimated savings of $400 
million for FY 2017.   
Reductions in Medicare Bad Debt Reimbursement.    Section 3201 of the Middle Class Tax Extension and  $1,140 
Seek legislative authority to eliminate (or reduce)  Job Creation Act of 2012 applied percentage 
Medicare payments to hospitals for bad debt  reductions in bad debt reimbursement to all 
associated with beneficiaries failure to pay their  providers eligible to receive bad debt reimbursement.  
deductibles and coinsurance.  The  CMS estimated savings to Medicare of $10.92 billion 
recommendations reflected findings in OIG report  over 10 years with $1.14 billion attributed to FY 2017.  
number A-14-90-00339 and subsequent reviews.  (77 Fed. Reg. 67450, 67523 (November 9, 2012)) 
Additional Rebates for Brand-Name Drugs with  Section 2501(d) of the ACA, as amended by section  $300 
Multiple Versions.    1206(a) of the Health Care and Education 
OIG recommended that CMS continue to seek  Reconciliation Act of 2010, addresses this issue.  CBO 
legislative authority to modify the rebate formula  estimated savings of $300 million for FY 2017.   
calculation to ensure that manufacturers cannot 
circumvent additional rebates by bringing new 
versions of existing brand-name drugs to market.  
The recommendation reflected findings in OIG 
report number A-06-09-00033. 
 
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Medicare Secondary Payer.   Section 111 of the Medicare, Medicaid, and SCHIP  $200 
Implement stronger followup procedures for  Extension Act of 2007 amended the Medicare 
employers who fail to respond to data requests,  secondary payer provisions of the Social Security Act, 
exercise civil monetary penalty authority, and seek   1862(b), to provide for mandatory reporting for 
necessary legislative authority for mandatory data  various categories.  CBO estimated savings of $200 
reporting.  The recommendations reflected  million for FY 2017. 
findings in the following OIG reports:  
A-02-98-01036, A-02-02-01037, A-02-02-01038, A-
04-01-07002, A-09-89-00100 
Medicare Payments for Vacuum Erection Systems.    Section 203 of the Achieving A Better Life Experience  $44.4 
Seek legislative authority to include vacuum  Act of 2014 implements changes to treat VES 
erection systems (VES) in the Competitive Bidding  prosthetic devices and related accessories as 
program and then implement a National Mail- statutorily noncovered in the same manner that 
Order Competitive Bidding program for VES.  The  erectile dysfunction drugs are treated in Medicare 
recommendation reflected findings in OIG report  Part D.  CBO estimated savings of $444 million over 
number A-07-12-05024.  10 years. 
Payments for Prescription Drugs Provided to  CMS issued a final rule about the Contract Year 2015  $108 
Incarcerated Beneficiaries.    Policy and Technical Changes to the Medicare 
Work with prescription drug plan sponsors to  Advantage and the Medicare Prescription Drug 
identify and resolve improper Medicare Part D  programs.  The eligibility requirements to enroll in 
payments made for prescription drugs provided to  Medicare Advantage and Part D are outlined in 
incarcerated beneficiaries.  The recommendation  Sections 1851(a)(3)(B) and 1860D-1(a)(3)(A) of the 
reflected findings in OIG report number A-07-12- Social Security Act.  To enroll in Medicare Advantage, 
06035.  a beneficiary must be entitled to Part A and enrolled 
in Part B.  To enroll in Part D, a beneficiary must be 
entitled to Part A and/or enrolled in Part B.  An 
incarcerated beneficiary is not precluded from 
meeting the eligibility requirements for Part A and 
Part B, but in general, no Medicare Payment is made 
for these individuals.  CMS promulgated regulations 
to require Part D plans to disenroll incarcerated 
beneficiaries.  CMS estimated savings of $1.6 billion 
over 10 years with $108 million attributed to FY 2017.  
(79 Fed. Reg. 29844, 29953 (May 23, 2014)) 
Excessive Medicaid Payments to New York State.    Agreement between CMS and the State of New York,  $100 
Ensure that expenditures related to developmental  dated March 20, 2015, to repay $1.95 billion over 12 
centers and other intermediate care facilities and  years with $100 million attributed to FY 2017. 
any revised payment methodology be consistent 
with efficiency and economy.  The 
recommendation reflected findings in OIG reports 
A-02-11-01029, A-02-13-01008, and other reviews.   
 
   
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Appendix C: Peer-Review Results 
Peer-Review Results 
The Inspector General Act of 1978, as amended, requires OIGs to report the results of peer 
reviews of their operations conducted by other OIGs, the date of the last peer review, 
outstanding recommendations from peer reviews, and peer reviews conducted by an OIG 
of other OIGs in the semiannual period.  Peer reviews are conducted by member 
organizations of the Council of the Inspectors General on Integrity and Efficiency (CIGIE).  
Recently CIGIE has approved a new peer-review process for Inspection and Evaluation units 
within OIGs across the Federal Government, including at HHS OIG, the implementation of 
which will begin in 2018. 
 
Office of Audit Services  
During this semiannual reporting period, no peer reviews involving OAS were completed.  
Listed below is information concerning OASs peer-review activities during prior reporting 
periods. 
 
OAS  Date  Reviewing Office  Office Reviewed 
May 2015  Department of  HHS OIG, OAS 
Transportation OIG 
 
The system of quality control for the audit organization of HHS OIG in effect for the 
year ending September 30, 2014, has been suitably designed and complied with to 
provide HHS OIG with reasonable assurance of performing and reporting in conformity 
with applicable professional standards in all material respects.  Federal audit 
organizations can receive a rating of pass, pass with deficiencies, or fail.  HHS OIG 
received a peer-review rating of pass. 
 
OAS  Date  Reviewing Office  Office Reviewed 
December 2015  HHS OIG, OAS  U.S. Department of Agriculture 
(USDA) OIG 
The system of quality control for the audit organization of USDA OIG in effect for the 
year ending March 31, 2015, has been suitably designed and complied with to provide 
USDA OIG with reasonable assurance of performing and reporting in conformity with 
applicable professional standards in all material respects.  Federal audit organizations 
can receive a rating of pass, pass with deficiencies, or fail.  USDA OIG received a peer-
review rating of pass. 
 
Office of Investigations 
During this semiannual reporting period, one peer review involving OI was completed.  
Listed below is information concerning OIs peer-review activities during prior reporting 
periods. 
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OI  Date  Reviewing Office  Office Reviewed 
August 2017  HHS OIG, OI  U.S. Postal Service OIG 
 
The system of internal safeguards and management procedures for the investigative 
function of HHS OIG in effect for the year ending September 30, 2015, was in full 
compliance with the quality standards established by CIGIE and the Attorney Generals 
guidelines. 
 
OI  Date  Reviewing Office  Office Reviewed 
June 2014  HHS OIG, OI  Treasury Inspector General for 
Tax Administration (TIGTA) 
 
The system of internal safeguards and management procedures for the 
investigative function of TIGTA, in effect through June 2014, was in full compliance 
with the quality standards established by CIGIE and the Attorney Generals 
guidelines. 
 
 
Office of Evaluation and Inspections  
During this semiannual reporting period OEI initiated a peer review of certain Department 
of Defense (DoD) OIG Inspection and Evaluations (I&E) units, at the request of DoD OIG.  
Results of this peer review will be reported in January 2018.  
 
OEI  Date  Reviewing Office  Office Reviewed 
September 2017  HHS OIG  DoD OIG, I&E units 
 
 
 
 
   
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Appendix D: Summary of Sanction Authorities 
The Inspector General Act of 1978, as amended, specifies requirements for semiannual 
reports to be made to the Secretary for transmittal to Congress.  A selection of other 
authorities appears below. 
Program Exclusions 
The Social Security Act,  1128 (42 U.S.C.  1320a-7), provides several grounds for excluding 
individuals and entities from participation in Medicare, Medicaid, and other Federal health 
care programs.  Exclusions are required for individuals and entities convicted of the 
following types of criminal offenses: (1) Medicare or Medicaid fraud; (2) patient abuse or 
neglect; (3) felonies for other health care fraud; and (4) felonies for illegal manufacture, 
distribution, prescription, or dispensing of controlled substances.   
OIG is authorized (permissive exclusion) to exclude individuals and entities on several other 
grounds, including misdemeanors for other health care fraud (other than Medicare or 
Medicaid); suspension or revocation of a license to provide health care for reasons bearing 
on professional competence, professional performance or financial integrity; provision of 
unnecessary or substandard services; submission of false or fraudulent claims to a Federal 
health care program; or engaging in unlawful kickback arrangements. 
The ACA added another basis for imposing a permissive exclusion, that is, knowingly 
making, or causing to be made, any false statements or omissions in any application, bid, 
or contract to participate as a provider in a Federal health care program, including 
managed care programs under Medicare and Medicaid, as well as Medicares prescription 
drug program. 
Providers subject to exclusion are granted due process rights.  These include a hearing 
before an administrative law judge and appeals to the HHS DAB and Federal district and 
appellate courts regarding the basis for and the length of the exclusion. 
Civil Monetary Penalties Law 
The CMPL of the Social Security Act, 1128A (42 U.S.C.  1320a 7a), imposes penalties, 
assessments, and exclusion from participation in Federal health care programs for 
engaging in certain activities.  For example, a person who submits, or causes to be 
submitted, to a Federal health care program a claim for items and services that the person 
knows, or should know, is false or fraudulent is subject to a penalty of up to $15,270 for 
each item or service falsely or fraudulently claimed, an assessment of up to 3 times the 
amount falsely or fraudulently claimed, and exclusion. 
For the purposes of the CMPL, should know is defined to mean that the person acted in 
reckless disregard or deliberate ignorance of the truth or falsity of the claim.  The law and 
its implementing regulations also authorize actions for a variety of other violations, 
including submission of claims for items or services furnished by an excluded person; 
requests for payment in violation of an assignment agreement; violations of rules regarding 
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the possession, use, and transfer of biological agents and toxins; and payment or receipt of 
remuneration in violation of the anti-kickback statute (42 U.S.C.  1320a 7b (b)).   
The ACA added more grounds for imposing CMPs.  These include, among other types of 
conduct, knowingly making, or causing to be made, any false statements or omissions in 
any application, bid, or contract to participate as a provider in a Federal health care 
program (including Medicare and Medicaid managed care programs and Medicare Part D); 
the ACA authorizes a penalty of up to $55,262 for each false statement, as well as activities 
relating to fraudulent marketing by managed care organizations, their employees, or their 
agents.   
The 21st Century Cures Act (enacted on December 13, 2016) added more grounds for 
imposing CMPs, assessments, and exclusion from Federal health care programs for 
fraudulent conduct in an HHS grant, contract, or other agreement.  OIG may assess CMPs 
of up to $10,000 per claim and assessments of up to 3 times the amount claimed for 
knowingly presenting a false or fraudulent claim.  In addition, OIG may impose a penalty of 
up to $50,000 and assessments of up to 3 times the amount of funds at issue (1) for each 
instance of knowingly making a false statement in a document required to be submitted in 
order to receive funds under an HHS contract, grant, or other agreement; (2) for knowingly 
making or using a false record or statement that is material to a false or fraudulent claim; 
and (3) for knowingly making or using a false record or statement material to an obligation 
to pay or transmit funds or property owed to HHS.  OIG may impose a penalty of up to 
$10,000 per day and assessments of up to 3 times the amount at issue for knowingly 
concealing, or knowingly and improperly avoiding or decreasing, an obligation owed to 
HHS with respect to an HHS grant, contract, or other agreement.  Finally, HHS OIG may 
impose a penalty of up to $15,000 per day for failing to grant timely access to OIG upon 
reasonable request for audits or to carry out other statutory functions in matters involving 
an HHS grant, contract, or other agreement.   
Patient Dumping 
The Social Security Act, 1867 (42 U.S.C.  1395dd), provides that when an individual goes to 
the emergency room of a Medicare-participating hospital, the hospital must provide an 
appropriate medical screening examination to determine whether that individual has an 
emergency medical condition.  If an individual has such a condition, the hospital must 
provide either treatment to stabilize the condition or an appropriate transfer to another 
medical facility.  
If a transfer is ordered, the transferring hospital must provide stabilizing treatment to 
minimize the risks of transfer and must ensure that the receiving hospital agrees to the 
transfer and has available space and qualified personnel to treat the individual.  In addition, 
the transferring hospital must effect the transfer through qualified personnel and 
transportation equipment.  Further, a participating hospital with specialized capabilities or 
facilities may not refuse to accept an appropriate transfer of an individual who needs 
services if the hospital has the capacity to treat the individual.  
OIG is authorized to collect CMPs of up to $52,414 against small hospitals (fewer than 100 
beds) and up to $104,826 against larger hospitals (100 beds or more) for each instance in 
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which the hospital negligently violated any of the section 1867 requirements.  In addition, 
OIG may collect a penalty of up to $104,826 from a responsible physician for each 
negligent violation of any of the section 1867 requirements and, in some circumstances, 
may exclude a responsible physician.  
Anti-Kickback Statute and Civil False Claims Act Enforcement Authorities 
The Anti-Kickback StatuteThe anti-kickback statute authorizes penalties against anyone who 
knowingly and willfully solicits, receives, offers, or pays remuneration, in cash or in kind, to 
induce or in return for (1) referring an individual to a person or an entity for the furnishing, or 
arranging for the furnishing, of any item or service payable under the Federal health care 
programs or (2) purchasing, leasing, or ordering, or arranging for or recommending the 
purchasing, leasing, or ordering, of any good, facility, service, or item payable under the Federal 
health care programs (Social Security Act,  1128B(b) (42 U.S.C.  1320a-7b(b)). 
Individuals and entities that engage in unlawful referral or kickback schemes may be subject to 
criminal penalties under the general criminal anti-kickback statute; a CMP under OIGs authority 
pursuant to the Social Security Act,  1127(a)(7) (42 U.S.C.  1320a-7a); and/or program exclusion 
under OIGs permissive exclusion authority under the Social Security Act,  1128(b)(7) (42 U.S.C.  
1320a-7(b)(7)). 
The False Claims ActUnder the FCA, as amended by the False Claims Amendments Act of 
1986 (31 U.S.C.  37293733), a person or an entity is liable for up to treble damages and a 
penalty between $10,957 and $21,916 for each false claim it knowingly submits, or causes to be 
submitted, to a Federal program.  Similarly, a person or an entity is liable under the FCA if it 
knowingly makes or uses, or causes to be made or used, a false record or statement to have a 
false claim paid.  The FCA defines knowing to include not only the traditional definition but 
also instances in which the person acted in deliberate ignorance or reckless disregard of the 
truth or falsity of the information.  Under the FCA, no specific intent to defraud is required.  
Further, the FCA contains a qui tam, or whistleblower, provision that allows a private individual 
to file a lawsuit on behalf of the United States and entitles that whistleblower to a percentage of 
any fraud recoveries.  The FCA was again amended in 2009 in response to recent Federal court 
decisions that narrowed the laws applicability.  Among other things, these amendments clarify 
the reach of the FCA to false claims submitted to contractors or grantees of the Federal 
Government.   
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Appendix E: Reporting Requirements in the 
Inspector General Act of 1978  
The reporting requirements of the Inspector General Act of 1978, as amended, are listed in the following table 
along with the location of the required information. 
Section  Requirement  Location 
Section 4     
(a)(2)  Review of legislation and regulations  Other HHS-Related Reviews and 
Investigations section   
Section 5     
(a)(1)  Significant problems, abuses, and deficiencies  Throughout this report 
(a)(2)  Recommendations with respect to significant  Throughout this report 
problems, abuses, and deficiencies 
(a)(3)  Prior significant recommendations on which  OIG Compendium of Unimplemented 
corrective action has not been completed  Recommendations (Compendium) 
(a)(4)  Matters referred to prosecutive authorities  Legal and Investigative Activities 
Related to the Medicare and Medicaid 
Programs section 
(a)(5)  Summary of instances in which information  None for this reporting period 
requested by OIG was refused 
(a)(6)  List of audit reports  Submitted to the Secretary under 
separate cover 
(a)(7)  Summary of significant reports  Throughout this report 
(a)(8)  Statistical Table 1Reports with Questioned Costs  Appendix A 
(a)(9)  Statistical Table 2Funds Recommended To Be Put  Appendix A 
to Better Use 
(a)(10)  Summary of previous audit reports without  Appendix A 
management decisions, in which no establishment 
comment was returned within 60 days, and in which 
there are any outstanding unimplemented 
recommendations 
(a)(11)  Description and explanation of revised management  Appendix A 
decisions 
(a)(12)  Management decisions with which the Inspector  None for this reporting period 
General disagrees 
(a)(13)  Information required by the Federal Information  Reported annually in the spring 
Security Management Act.   Semiannual Report, Other HHS-
Related Reviews and Investigations 
section 
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Section  Requirement  Location 
(a)(14)-(16)  Results of peer reviews of HHS OIG conducted by  Appendix C 
other OIGs or the date of the last peer review, 
outstanding recommendations from peer reviews, 
and peer reviews conducted by HHS OIG of other 
OIGs 
(a)(17)  Investigative statistical tables  Appendix F 
(a)(18)  Metrics description for statistical tables  Appendix F 
(a)(19)  Investigations on Senior Government Employees  Appendix F 
(a)(20)  Description of whistleblower retaliation instances  Appendix F 
(a)(21)  Description of attempts to interfere with OIG  Appendix F 
independence 
(a)(22)  Description of closed and nondisclosed reports and  Appendix F 
investigations regarding Senior Government 
Employees 
 
Other Reporting Requirements 
Section  Requirement  Location 
845  Significant contract audits required to be reported  Other HHS-Related Reviews and 
pursuant to the National Defense Authorization Act  Investigations section 
for FY 2008 (P.L. No. 110-181),  845. 
 
205  Pursuant to HIPAA (P.L. No. 104-191),  205, the  Reported annually in the fall 
Inspector General is required to solicit proposals  Semiannual Report,  Appendix G 
annually via a Federal Register notice for developing   
new and modifying existing safe harbors to the anti-
kickback statute of the Social Security Act,  1128(b) 
and for developing special fraud alerts.  The 
Inspector General is also required to report annually 
to Congress on the status of the proposals received 
related to new or modified safe harbors. 
 
1553  Pursuant to the American Recovery and  Other HHS-Related Reviews and 
Reinvestment Act of 2009, P.L. No. 111-5,  1553, OIG  Investigations section 
reports to Congress the retaliation complaint 
investigations it decided not to conduct or continue 
during the period. 
   
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Appendix F: Reporting Requirements in the 
Inspector General Empowerment Act of 2016 
The Inspector General Empowerment Act of 2016 (IGEA) establishes new reporting 
requirements for the Semiannual Reports.  These requirements amend portions of  5 of 
the Inspector General Act.  The requirements are below in italics, followed by OIGs 
responses.  
Each Inspector General shall, not later than April 30 and October 31 of each year, prepare 
semiannual reports summarizing the activities of the Office during the immediately 
preceding six-month periods ending March 31 and September 30.  Such reports shall 
include, but need not be limited to- 
(10) A summary of audit, inspection, and evaluation reports issued before the 
commencement of the reporting period- 
(A) for which no management decision has been made by the end of the reporting period 
(including the date and title of each such report), an explanation of the reasons such 
management decision has not been made, and a statement concerning the desired 
timetable for achieving a management decision on each such report; 
For audit, inspection, and evaluation reports issued from FY 2011 through FY 2017, OIG 
had 126 reports with overdue final management decisions.1   
OIG is unable to provide reasons and timetables for each of these overdue management 
decisions, due to the volume and that OIG did not historically track this information. 
(B) for which no establishment comment was returned within 60 days of providing the 
report to the establishment; and 
For draft reports that include recommendations, OIG typically requests establishment 
comments within 30 days.  In some instances, OIG grants extensions when requested and 
appropriate.  When OIG does not receive establishment comments or a request for 
extension within the 30-day timeframe, OIG typically issues the report and notes the lack 
of establishment comments.   
For this semiannual reporting period, OIG had no reports with comments exceeding 60 
days.   
(C) for which there are any outstanding unimplemented recommendations, including the 
aggregate potential cost savings of those recommendations. 
 
 
1 OIG is able to track the status of management decisions for all reports back to FY 2011.  OIG can track the status of management decisions 
for audit reports back to FY 1990.  We have identified 10 additional audit reports with overdue management decisions from FY 1990 through 
FY 2010.   
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OIG is actively tracking 1,344 unimplemented open recommendations made in reports 
issued since FY 2011.  Given the volume of recommendations OIG makes each year, the 
table below reflects summary data by fiscal year: 
 
Fiscal Year  Number of Reports  Number of  Dollar Value of 
(20112017)  with Unimplemented  Unimplemented  Aggregate Potential 
Recommendations  Recommendations  Cost Savings 
2011  20  39  $444,267,108 
2012  39  66  $350,705,539 
2013  53   124  $872,462,968 
2014  57  117  $15,164,610,238 
2015  61  138  $536,392,445 
2016  112  322  $440,555,639 
2017  139  538  $2,553,368,595 
Totals  481  1344  $20,362,362,532 
OIG annually produces a Compendium of Unimplemented Recommendations, which 
constitutes OIGs response to a specific requirement of the Inspector General Act, as 
amended ( 5(a)(3)).  It identifies significant recommendations with respect to problems, 
abuses, or deficiencies for which corrective actions have not been completed.  The 
Compendiums appendix is a list of OIGs significant unimplemented recommendations, 
which represent opportunities to achieve expected impact through cost savings, 
improvements in program effectiveness and efficiency, or increasing quality of care and 
safety of beneficiaries.  In OIGs view, these recommendations would most positively impact 
HHS programs in terms of cost savings and/or quality improvements and should therefore 
be prioritized for implementation.   
(17) Statistical tables showing- 
(A) the total number of investigative reports issued during the reporting period; 
(B) the total number of persons referred to the Department of Justice for criminal prosecution 
during the reporting period; 
(C) the total number of persons referred to State and local prosecuting authorities for criminal 
prosecution during the reporting period; and 
(D) the total number of indictments and criminal informations during the reporting period 
that resulted from any prior referral to prosecuting authorities; 
Total number of investigative reports issued during the reporting period,  0 
including Management Implication Reports and Investigative Advisories 
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Total number of persons referred2 to DOJ and/or State/local prosecuting  1,453 
authorities for criminal prosecution during the reporting period3 
Total number of indictments and criminal informations during the reporting  519 
period that resulted from any prior referral to prosecuting authorities 
 
 
(18) A description of the metrics used for developing the data for the statistical tables under 
paragraph (17); 
Regarding (17)(A), OIG considers Investigative Reports as Management Implication Reports 
and Investigative Advisories.  A Management Implication Report is a document that 
identifies systemic weaknesses or vulnerabilities within HHS programs, which are generally 
identified during the course of an OIG investigation and could lead to fraud, waste, or 
abuse.  It provides recommendations to correct or minimize the problem.  Corrective 
actions may require administrative, procedural, policy, regulatory, or legislative change.  
When a Management Implication Report is issued to an HHS operating division or staff 
division, it is generally signed by the Inspector General.  Investigative Advisories are similar 
documents that bring renewed attention to an identified HHS issue and are generally 
signed by the Deputy Inspector General for Investigations. 
Regarding (17)(B) and (C), OIG defines this measure as the term presentations to both 
Federal and State/local prosecuting jurisdictions as the representation of the work we do.  
For example, when OIG opens an investigation, it evaluates the complaint and makes a 
decision whether to present the matter for prosecution.  Generally, if the case has 
prosecutorial merit, and is accepted for Federal prosecution, OIG works with DOJ as the 
primary investigative agency, as opposed to referring the matter to DOJ without further 
involvement on OIGs part.  OIG works with State and local prosecutorial authorities in 
addition to working with DOJ.   
Currently, OIGs case management system does not have the capability to distinguish 
between a Federal and State presentation.  Consequently, the information provided in the 
table represents presentations to both Federal and State/local prosecuting jurisdictions.  
Beginning in FY 2018, OIG will have the capability to separate Federal from State/local 
presentations and will begin reporting this information accordingly.      
Regarding (17)(D), the table provides the number of indictments/criminal informations 
during the semiannual reporting period, including sealed indictments/criminal informations.  
However, the information cannot be limited to only those that occurred as a result of a 
presentation in a previous period.  In certain situations, the presentation and charging 
dates are in the same reporting period.  Also, as mentioned above, beginning in FY 2018, 
OIG will have the capability to separate Federal from State/local indictments/criminal 
informations and will begin reporting this information accordingly.   
 
 
2 A referral includes OIG presentations to DOJ and/or State/local prosecutorial authorities.   
3  OIG counts persons as both individuals and entities.   
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(19) A report on each investigation conducted by the Office involving a senior Government 
employee where allegations of misconduct were substantiated, including a detailed 
description of- 
(A) the facts and circumstances of the investigation; and 
(B) the status and disposition of the matter, including- 
(i) if the matter was referred to the Department of Justice, the date of the referral; and 
(ii) if the Department of Justice declined the referral, the date of the declination; 
 
To respond fully to this subparagraph, OIG would need to make a finding of misconduct.  
However, OIG does not make findings with regard to its investigations relating to 
substantiated allegations of departmental employee misconduct.  Our reports relay the 
facts obtained during the investigations (e.g., parties involved, dates of events) related to 
any substantiated allegations.  At the conclusion of an OIG investigation related to 
substantiated allegations concerning possible employee misconduct, OIG provides a report 
to management in the employing agency.  The agency management makes determinations 
of employee misconduct.  The disposition of the matter and any resulting administrative 
actions are taken by the agency.   
However, we request from the agency a copy of an SF-50 documenting a personnel action, 
if one is taken.  To the extent that we have information regarding subsequent 
administrative action, OIG is able to provide that information.  However, because there are 
sometimes settlement agreements that may impact the final action, OIG may not have a 
complete record of the disposition of the investigation.  Accordingly, such information 
might be more efficiently and effectively provided directly by the employing agency.   
For this section, OIG describes investigations during this reporting period, both criminal 
and administrative, involving senior Government employees for whom allegations of 
misconduct were substantiated.  The descriptions below include a level of detail 
appropriate for each investigation, depending on whether the case details were available in 
public documents.  During this reporting period, OIG investigated three senior Government 
employees for misconduct, and OIG determined the allegations to be substantiated, but no 
prosecution resulted.  Descriptions of the investigations are below. 
 
DOJ  DOJ 
DOJ  Referral  DOJ  Declination 
Description of Investigation  Status  Disposition  Referral  Date  Declination  Date 
A senior Government employee was 
Voluntary 
alleged to have given the winner of 
Dismissal/ 
an IT contract pre-bidding  Closed  Yes  09/2015  N/A  N/A 
Nolle 
information in exchange for potential 
Prosequi 
post-government employment. 
A senior Government employee was 
alleged to have demonstrated a lack  Written 
Closed  No  N/A  N/A  N/A 
of oversight regarding an employee  Reprimand 
this person supervised who allegedly 
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spent the majority of his time in 
another country.    
A senior Government employee was  Written 
alleged to have revoked an  Reprimand/ 
employees clearance following a  Closed  Resigned  No  N/A  N/A  N/A 
disclosure of the senior employees  After 
gross mismanagement  Investigation 
 
20) A detailed description of any instance of whistleblower retaliation, including information 
about the official found to have engaged in retaliation and what, if any, consequences the 
establishment imposed to hold that official accountable; 
 
For departmental agencies, OIG conducts investigations and gathers facts related to 
whistleblower complaints.  Before 2015, OIG made no determinations as to whether 
retaliatory action had been taken.  However, to better facilitate the report review process, 
OIG changed its process in 2015 to include findings in its reports as to whether it was more 
likely than not that whistleblower retaliation had occurred.  While OIG now includes these 
findings in its reports, it does not make recommendations as to what, if any, corrective 
action(s) should be taken.   
Under this system, OIG submitted two reports that included findings of retaliation to the 
HHS Office of the Secretary prior to October 1, 2016 (both prior to the semiannual reporting 
period).  Because these reports are still under review by the Department, OIG will not 
comment about them at this time.  OIG will include information about these reports in 
OIGs Semiannual Report following the Departments resolution of the matter.   
When determining the level of detail to provide for a description of any instance of 
whistleblower retaliation, OIG is always mindful of the risk that a detailed description of the 
allegation could inadvertently reveal the whistleblowers identity, thus having a chilling 
effect on future whistleblowers. 
 
(21) A detailed description of any attempt by the establishment to interfere with the 
independence of the Office, including- 
(A) with budget constraints designed to limit the capabilities of the Office; and 
(B) incidents where the establishment has resisted or objected to oversight activities of 
the Office or restricted or significantly delayed access to information, including the 
justification of the establishment for such action; and 
 
Although there have been instances in which HHS agencies have questioned OIG oversight 
activities or have not provided all information in the precise content, format, and timeline 
as requested, OIG has not identified any instances in which the Department interfered with 
the independence of OIG during this reporting period.  OIG would immediately notify 
Congress if it were unable to resolve these issues within the Department.   
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(22) Detailed descriptions of the particular circumstances of each- 
(A) inspection, evaluation, and audit conducted by the Office that is closed and was not 
disclosed to the public; and 
 
The table below lists evaluation and audit reports for this semiannual reporting period that 
did not result in public reports.  However, in some circumstances, a public summary of 
these nonpublic reports was published 
.   
Nonpublic Reports by Category, April 1, 2017, to September 30, 2017 
Number 
Category/Description  of 
Reports 
IT security reviews (involve IT systems, e.g., penetration test audits)  9 
Homeland security issues (involve particularly sensitive topics, e.g., bioterrorism, emergency 
1 
preparedness, and classified or potentially classified information) 
Recipient Capability Audits (primarily in Head Start/Early Head Start programs)  0 
Reimbursable audits performed for other Federal agencies (primarily contract audits)  0 
Confidential or proprietary information (e.g., Medicare Part B drug claims/imaging services, 
3  
Medicare investment income) 
Medicare Adverse Event Reviews (required by law not to disclose)  0 
Medicare Prescription Drug Event Reviews  0 
Other  2 
Departmental technical assistance reports4   1 
Finance-related attestation reviews  3 
     Total  19 
 
(B) Investigation conducted by the Office involving a senior Government employee that is closed 
and was not disclosed to the public. 
 
In section 5(a)(19), we detail investigations of senior Government employees in which 
allegations were substantiated.  Those investigations are all closed and none have been 
disclosed to the public.  OIG interprets section 5(a)(22)(B) as requiring reporting on 
investigations with either substantiated or unsubstantiated allegations.  As such, we refer to 
our section 5(a)(19) response to address investigations of senior Government employees in 
which allegations were substantiated that were closed and not disclosed to the public.  Our 
section 5(a)(22)(B) response describes investigations during this reporting period, both 
criminal and administrative, involving a senior Government employee in which OIG did not 
substantiate allegations of misconduct.   
 
 
4 OIG routinely provides technical assistance to the Department.  Generally, that technical assistance is not part of a formal report and is not 
formally tracked.  However, in some limited circumstances, OIG does provide technical assistance in a formal report, and only that category 
of technical assistance is reflected in this table.   
 
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When determining the level of detail to provide for the investigations described above, OIG 
is mindful of the risk that a detailed description of the investigation could inadvertently 
reveal the subjects identity.  During this reporting period, OIG investigated five senior 
Government employees for misconduct, but OIG determined the allegations to be 
unsubstantiated.  Descriptions of the investigations are below.  
 
Description of Investigation  Status  Disposition  DOJ  DOJ  DOJ  DOJ 
Referral  Referral  Declination  Declinati
Date  on Date 
A senior Government employee 
was alleged to have changed their 
No evidence 
duty location in order to receive 
Closed  to support  Yes  12/2016  Yes  12/2016 
per diem and other travel benefits 
allegations. 
such as plane tickets to travel 
home each week. 
A senior Government employee 
was alleged to have conflicts of  No evidence 
interest with contractors, abused  Closed  to support  Yes  05/2016  Yes  05/2016 
their authority, and mismanaged  allegations. 
personnel matters. 
A senior Government employee 
No evidence 
was alleged to have colluded with 
Closed  to support  No  N/A  No  N/A 
a contractor to escalate billing 
allegations. 
costs. 
A senior Government employee 
was alleged to have falsely grown  No evidence 
their division into an office in  Closed  to support  No  N/A  No  N/A 
order to acquire grants and Senior  allegations. 
Executive Service title. 
   
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APPENDIX G: Anti-Kickback StatuteSafe 
Harbors 
Anti-Kickback Statute  Safe Harbors 
Pursuant to HIPAA,  205, the Inspector General is required to solicit proposals annually via 
a Federal Register notice for developing new and modifying existing safe harbors to the 
anti-kickback statute, section 1128B(b) of the Social Security Act, and for developing special 
fraud alerts.  The Inspector General is also required to report annually to Congress on the 
status of the proposals received related to new or modified safe harbors.  
 
In crafting safe harbors for a criminal statute, it is incumbent upon the OIG to engage in a 
complete and careful review of the range of factual circumstances that may fall within the 
proposed safe harbor subject area to uncover all potential opportunities for fraud and 
abuse by unscrupulous providers.  Having done so, OIG must then determine, in 
consultation with DOJ, whether it can develop effective regulatory limitations and 
controlsnot only to foster beneficial or innocuous arrangements but also to protect the 
Federal health care programs and their beneficiaries from abusive practices. 
Public proposals for new and modified safe harbors  
In response to the 2016 annual solicitation, OIG received the following proposals related to 
safe harbors: 
 
Proposal  OIG Response 
A new safe harbor that would protect  OIG is not adopting this suggestion at this time, as it 
value-based payment arrangements that  requires further study.  In the meantime, questions 
bundle products and related services and allow  about the application of the anti-kickback statute to 
for price adjustments if a measurable clinical  such arrangements should be addressed on a case-
and/or cost outcome is not achieved.    by-case basis, such as under the advisory opinion 
process. 
A new safe harbor that would protect value- OIG is not adopting this suggestion at this time, as it 
based warranties offered by manufacturers or  requires further study.  In the meantime, questions 
suppliers of products that provide certain  about the application of the anti-kickback statute to 
assurances about clinical and/or cost outcomes  such arrangements should be addressed on a case-
and appropriate remedies where such  by-case basis, such as under the advisory opinion 
outcomes are not achieved.     process. 
   
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A new safe harbor that would protect  OIG is not adopting this suggestion at this time, as it 
value-based payment arrangements generally.  requires further study.  In the meantime, questions 
about the application of the anti-kickback statute to 
such arrangements should be addressed on a case-
by-case basis, such as under the advisory opinion 
process. 
A new safe harbor that would protect  OIG is not adopting this suggestion at this time, as it 
arrangements that support patient adherence  requires further study.  In the meantime, questions 
to a treatment regimen that has been  about the application of the anti-kickback statute to 
recommended by the patients health care  such arrangements should be addressed on a case-
provider.    by-case basis, such as under the advisory opinion 
process. 
A new safe harbor that would protect  OIG is not adopting this suggestion at this time, as it 
arrangements that pay for, or provide, data  requires further study.  In the meantime, questions 
analytics.   about the application of the anti-kickback statute to 
such arrangements should be addressed on a case-
by-case basis, such as under the advisory opinion 
process. 
The modification of the personal services and  OIG is not adopting this suggestion at this time, as it 
management contracts safe harbor, 42 C.F.R.  requires further study.  In the meantime, questions 
 1001.952(d), to protect personal services  about the application of the anti-kickback statute to 
arrangements involving part-time or periodic  such arrangements should be addressed on a case-
services that lack an exact schedule of services  by-case basis, such as under the advisory opinion 
or precise length of intervals.    process. 
The modification of the discounts safe harbor,  OIG is not adopting this suggestion at this time, as it 
42 C.F.R.  1001.952(h), to include exceptions for  requires further study.  In the meantime, questions 
value-based arrangements within the existing  about the application of the anti-kickback statute to 
definition of discount; to protect certain  such arrangements should be addressed on a case-
discounts offered in connection with value- by-case basis, such as under the advisory opinion 
based arrangements; and to define value- process. 
based arrangement to capture appropriate and 
beneficial arrangements while excluding 
arrangements that are abusive or result in 
inappropriate financial incentives.   
The modification of the discounts safe harbor,  OIG is not adopting this suggestion at this time, as it 
42 C.F.R.  1001.952(h), to expand upon the  requires further study.  In the meantime, questions 
subcategories of buyers potentially protected  about the application of the anti-kickback statute to 
by the safe harbor; to specify under what  such arrangements should be addressed on a case-
circumstances a discount or rebate  by-case basis, such as under the advisory opinion 
arrangement may involve the performance of  process. 
services or activities; and to clarify the 
disclosure obligations that arise under the safe 
harbor.    
The modification of the warranties safe harbor,  OIG is not adopting this suggestion at this time, as it 
42 C.F.R.  1001.952(g), to protect remuneration  requires further study.  In the meantime, questions 
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paid to cover certain services and items that are  about the application of the anti-kickback statute to 
related to the item that is the subject of the  such arrangements should be addressed on a case-
warranty in the context of value-based  by-case basis, such as under the advisory opinion 
arrangements.  process. 
The modification of the warranties safe harbor,  OIG is not adopting this suggestion at this time, as it 
42 C.F.R.  1001.952(g), to protect manufacturer- requires further study.  In the meantime, questions 
issued refunds in circumstances in which the  about the application of the anti-kickback statute to 
manufacturers products do not work as  such arrangements should be addressed on a case-
specified for individual patients or patient  by-case basis, such as under the advisory opinion 
populations, particularly in outcomes or  process. 
value-based arrangements.   
The modification of the price reductions offered  OIG is not adopting this suggestion at this time, as it 
to health plans, price reductions offered to  requires further study.  In the meantime, questions 
eligible managed care organizations, and price  about the application of the anti-kickback statute to 
reductions offered by contractors with  such arrangements should be addressed on a case-
substantial financial risk to managed care  by-case basis, such as under the advisory opinion 
organizations safe harbors, 42 C.F.R.   process. 
1001.952(m), (t), and (u), to clarify the 
circumstances under which drug manufacturer 
rebate agreements with managed care 
organizations or pharmacy benefit managers 
would be protected. 
 
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