Office of 
Inspector 
General 
Semiannual 
Report 
Congress 
To 
April 1, 2012  September 30, 2012   
 
OIG Organization 
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) employs 
about 1,700 professional staff members who are deployed throughout the Nation in regional and 
field offices and in Washington, DC, headquarters.  We conduct audits, evaluations, and 
investigations; provide guidance to industry; and, when appropriate, impose sanctions such as civil 
monetary penalties (CMP) and exclude individuals and entities from participation in Federal health 
care programs.  We collaborate with HHS and its operating and staff divisions, the Department of 
Justice (DOJ) and other executive branch agencies, Congress, and States to bring about systemic 
changes, successful prosecutions, negotiated settlements, and recovery of funds.  Following are 
descriptions of ouTr HmEi OssFiFoInC-Eb OaFs eAdU cDoITm SpEoRnVeICnEtSs .(  OAS)
 
S
 provides auditing services for HHS, either by 
A conducting audits with its own audit resources or by overseeing audit work done 
by others.  Audits examine the performance of HHS programs and/or its grantees 
O
and contractors in carrying out their respective responsibilities and are intended 
to provide independent assessments of HHS programs and operations.  These 
assessments help reduce waste, abuse, and mismanagement and promote 
eTcHoEn OomFFyIC aEn OdF  eEfVfiAcLieUnAcTyIO tNh rAoNuDg IhNoSuPtE HCTHIOS.N S (OEI)
I  
E  conducts national evaluations to 
provide HHS, Congress, and the public with timely, useful, and reliable information 
O
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 
oTpHeEr OatFiFoInCsE.  OF INVESTIGATIONS (OI)
I    conducts criminal, civil, and administrative 
O investigations of fraud and misconduct related to HHS programs, operations, and 
beneficiaries.  With investigators working in almost every State and the District of 
Columbia, OI actively coordinates with DOJ and other Federal, State, and local law 
enforcement authorities.  The investigative efforts of OI often lead to criminal 
cToHnEv OicFtFioICnEs ,O aFd CmOiUnNisStErLa TtiOv eT HsaEn INctSiPoEnCsT, OoRr  CGMENPEsR. AL (OCIG)
G  
 provides general legal 
services to OIG, rendering advice and opinions on HHS programs and operations 
I
and providing all legal support for OIGs internal operations.  OCIG represents OIG 
C
in all civil and administrative fraud and abuse cases involving HHS programs, 
O including False Claims Act, program exclusion, and CMP cases.  In connection with 
these cases, OCIG also negotiates and monitors corporate integrity agreements.  
OCIG renders advisory opinions, issues compliance program guidance, publishes 
fraud alerts, and provides other guidance to the health care industry concerning 
the antikickback statute and other OIG enforcement authorities. 
 
The organizational entities described above are supported by the Immediate Office of the Inspector 
General and the Office of Management and Policy.  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
A Message From 
Semiannual Report to Congress
the Inspector General 
This  , submitted pursuant to the 
Inspector General Act of 1978, as amended, summarizes the activities  Daniel R. Levinson 
Inspector General 
of the Office of Inspector General (OIG), Department of Health and   
Human Services (HHS), for the 6-month period ending September 30, 
2012.  
 
or more than 30 years, OIGs commitment to protecting the integrity of HHS programs 
and the health and welfare of the people they serve has not wavered.  But over time, our 
responsibilities have increased, our priorities have expanded, and our approaches have 
been refined as health care programs, vulnerabilities, and practices evolve.  In fiscal year 
F 
2012, we achieved record-setting monetary and enforcement results and recommended 
critical actions to improve HHS programs and protect beneficiaries.  OIG has also expanded 
our outreach to health care providers and industry by launching new tools and forums for 
promoting compliance.  We continue to capitalize on our partnerships with other law 
enforcement agencies and our HHS colleagues through the Health Care Fraud Prevention 
and Enforcement Action Team (HEAT), to crack down on those who commit fraud and bilk 
scarce resources from the Medicare and Medicaid programs.  OIGs HEAT portfolio expanded 
during this reporting period to include reports on questionable billing trends in community 
mental health centers, retail pharmacies, and home health agencies.     
The results of OIGs audit, evaluation, enforcement, and compliance work underscore that 
the Department continues to face significant management and performance challenges in 
key areas, including reducing improper payments and avoiding waste, ensuring patient 
safety and quality of care, and overseeing program integrity contractors.  As the Department 
implements the Affordable Care Act and other health care reforms, it faces challenges in 
ensuring that these issues are not carried over to new programs and dimensions of existing 
programs.  OIG has offered a robust collection of recommendations to help the Department 
meet these challenges.   
Improper payments cost Federal programs billions of dollars annually.  For FY 2011, the 
Department reported improper payments totaling more than $64 billion in the Medicare 
and Medicaid programs.  OIG work continues to find vulnerabilities in the Departments 
ability to identify and reduce improper payments and has documented improper Medicare 
payments for durable medical equipment and for capitated payments to Medicare 
Advantage organizations.  OIG work also demonstrated flaws in payment methodologies 
that contribute to wasteful spending.  We have offered a wide array of recommended actions 
to address payment issues. 
As the purchaser of health care for over 100 million Americans, the Department faces 
challenges in ensuring the quality of care rendered to Federal health care program 
beneficiaries.  OIGs work continues to address quality and patient safety vulnerabilities by 
revealing persistent gaps in nursing homes plans in the event of a disaster.  OIG also 
recommended improvements to a program that provides free vaccines to children to better 
ensure that vaccines are stored appropriately to maintain potency and efficacy.  OIG remains 
  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
vigilant in investigating off-label promotion of drugs that can be dangerous and harmful to 
beneficiaries.  The pharmaceutical company GlaxoSmithKline entered into a global criminal, 
civil, and administrative settlement and agreed to pay $3 billion to resolve misconduct 
allegations; this was the largest health care fraud settlement in U.S. history.   
The Centers for Medicare and Medicaid Services (CMS) at HHS places significant reliance on 
contractors to perform a number of administrative and program integrity functions.  OIG 
work continues to find weaknesses in both contractor performance and CMS oversight, and 
we have recommended actions to improve the potential of several related CMS programs.   
Since its 1976 establishment, OIG has been at the forefront of the Nations efforts to fight 
waste, fraud, and abuse in Medicare and Medicaid and the more than 300 other HHS 
programs.  I would once again like to express my appreciation to Congress and to the 
Department for their sustained commitment to addressing the top challenges facing HHS 
programs.   
 
 
Daniel R. Levinson 
Inspector General 
 
 
  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
Highlights 
 
Semiannual Report to Congress Semiannual Report
he Department of Health and Human Services (HHS) Office of Inspector General (OIG) 
 ( ) describes significant problems, 
abuses, deficiencies, and investigative outcomes relating to the administration of HHS 
programs and operations that were disclosed during the reporting period.  This edition 
T 
addresses worSke mcoiamnpnlueatel dR edpuorrintg the second half of fiscal year (FY) 2012 (April - 
September) and provides summary data oWno kreky P alcacnomplishments during the period and for 
the year.  The  , which describes OIGs output in 6-moCnothm ipnecnrdeimumen ts, is 
oofn Ue noifm OpIlGems ethnrteeed  cRoerceo mpumbelincdaatitoionnss.  Our   describes work in progress and new 
projects that we plan to pursue during the fiscal year and beyond.  Our 
 describes open recommendations from prior periods 
that when implemented will save tax dollars and improve programs.     
Summary of Fiscal Year 2012 Accomplishments 
 
For FY 2012, we reported expected recoveries of about $6.9 billion consisting of 
$923.8 million in audit receivables and $6 billion in investigative receivables (which 
includes $1.7 billion in non-HHS investigative receivables resulting from our work in areas 
such as the States shares of Medicaid restitution).  We also identified about $8.5 billion in 
savings estimated for FY 2012 as a result of legislative, regulatory, or administrative actions 
that were supported by our recommendations.  Such savings generally reflect third-party 
estimates (such as those by the Congressional Budget Office) of funds made available for 
better use through reductions in Federal spending.   
We reported FY 2012 exclusions of 3,131 individuals and entities from participation in 
Federal health care programs; 778 criminal actions against individuals or entities that 
engaged in crimes against HHS programs; and 367 civil actions, which include false claims 
and unjust-enrichment lawsuits filed in Federal district court, civil monetary penalties 
(CMP) settlements, and administrative recoveries related to provider self-disclosure 
matters.  Following are highlights of some of the significant problems, abuses, deficiencies, 
activities, and investigative outcomes that are included in the Semiannual Report for the 
second half of FY 2012. 
Health Care Fraud Prevention and Enforcement 
Action Team 
 
The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was started in 
2009 by HHS and the Department of Justice (DOJ) to strengthen programs and invest in new 
resources and technologies to prevent and combat health care fraud, waste, and abuse.  
  Page i  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
HEAT has continued with increasing momentum to identify and hold accountable those who 
sHeeeka lttoh d Cefarareud F Mraeuddic aPrree avnedn Mtieodnic aSiud.m  mit  
On April 4, 2012, HHS and DOJ hosted the seventh regional Health Care Fraud Prevention 
Summit, held in Chicago.  The Summits bring together a wide array of Federal, state, and 
local partners, beneficiaries, providers, and other interested parties to discuss innovative 
ways to eliminate fraud within the U.S. health care system.  The Chicago Summit focused on 
the latest technological advancements, including data analytics, now being used to identify, 
prevent, and prosecute fraud.  HHS Secretary Kathleen Sebelius and Attorney General Eric 
HMoelddeirc parroev iSdterdik kee yFnoortcee r eTmeaarmkss.   
Medicare Fraud Strike Force teams coordinate law enforcement operations conducted 
jointly by Federal, State, and local law enforcement entities.  The teams, now a key 
component of HEAT, have a record of successfully analyzing data to quickly identify and 
prosecute fraud.  The Strike Force began in March 2007 and is operating in nine major cities.  
The effectiveness of the Strike Force model is enhanced by interagency collaboration.  For 
example, we refer credible allegations of fraud to the Centers for Medicare & Medicaid 
Services (CMS) so that it can suspend payments to the perpetrators.  During Strike Force 
operations, OIG and CMS work to impose payment suspensions that immediately prevent 
  Strike Force Accomplishments 
losses from claims submitted by Strike Force targets. 
 During FY 2012, Strike Force efforts resulted in the filing 
of charges against 305 individuals or entities, 181 convictions, and $151 million in 
  Nationwide Takedown 
investigative receivables.   
 On May 2, 2012, over 200 OIG Special Agents, Forensic 
Examiners and Analysts participated in Medicare Fraud Strike Force operations in 
7 cities that resulted in charges against 107 individuals, including doctors, nurses, and 
other licensed medical professionals, for their alleged participation in Medicare fraud 
schemes involving approximately $452 million in false billing.  The coordinated 
takedown involved the highest amount of Medicare false billings in a single takedown by 
Stritkhee  FHoErAcTe s tCraiksee f orce.    
Home Health Agency Owners, Co-Conspirators Sentenced (Texas) 
 Between April 2006 and 
August 2009, Family Healthcare Group, Inc. (Family Healthcare Services (FHS)), a home 
health agency, submitted fraudulent claims to Medicare for services that were medically 
unnecessary or not provided.  The scheme involved co-conspirators receiving kickbacks to 
recruit Medicare beneficiaries to receive skilled nursing services from FHS.  To date, nine 
individuals have been sentenced in connection with this scheme and two have been 
excluded from participation in Medicare, Medicaid, and Federal health care programs by OIG 
for 30 years.   
  Page ii  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
Prescription-Drug-Related Investigations  
 
 
Medicare and Medicare are major payers of prescription drugs.  Our investigations and 
reviews find vulnerabilities at many levels, including pharmaceutical manufacturer 
noncompliance, retail pharmacy and prescriber schemes, drug diversion, and flawed 
rCeaimsebsu rasnemd eSnett mtleetmhoednoltosg ies. 
  GlaxoSmithKline Agrees To Pay $3 Billion to Resolve Violations Regarding its Marketing and 
Promotion Practices (Massachusetts) 
 GlaxoSmithKline (GSK) entered into a global 
criminal, civil, and administrative settlement and agreed to pay $3 billion to resolve its 
liability for its marketing and promotion practices associated with several drugs.  In 
three False Claims Act settlement agreements, the United States alleged that GSK 
promoted several drugs for off-label uses and paid kickbacks to induce the prescription 
of certain drugs, improperly promoted certain drugs with false and misleading 
statements about the drugs safety, and violated the requirements of the Medicaid drug 
rebate program.  As part of the settlement, GSK entered into a 5-year Corporate Integrity 
Agreement with OIG.  In addition to the settlement with the Federal government, GSK 
  Mother and Son Sentenced to a Combined 19 Years in a Prescription Drug Fraud Scheme
entered into separate Medicaid-related settlements with multiple States.   
Washington) 
 
(  Medical clinic owners Antoine Johnson, M.D., and his mother, Lawanda 
Johnson, were sentenced for health care fraud and for filing false income tax returns.  
According to court documents, Antoine Johnson, the sole physician for several clinics, 
used three clinics to write a high number of prescriptions to thousands of patients for 
narcotic pain medications, such as oxycodone and methadone, often while providing 
little or no medical care.  Antoine Johnson and Lawanda Johnson were each excluded by 
OIG for 40 years and 30 years, respectively. 
Patient Safety and Quality of Care 
 
As purchasers of health care, Medicare and Medicaid face challenges in ensuring quality of 
Ncaurer sfoinr gth Heior mbeene Sfieciravriicees.s   DFeosupinted i nWcroeratshedle astste ntion to patient safety, problems persist. 
Nursing Home Operator Sentenced to 20 Years for Providing Worthless Services (Georgia) 
 
Former nursing home operator George Houser was sentenced to 20 years of incarceration 
and ordered to pay $6.7 million in restitution after being convicted on charges of submitting 
claims to the Medicare and Georgia Medicaid programs for services provided to residents 
that were so deficient the judge determined them to be worthless.  During the trial, 
witnesses testified that there were food shortages, leaking roofs, virtually no nursing or 
housekeeping supplies, poor sanitary conditions, major staff shortages, and serious safety 
concerns at the three nursing homes that Houser and his wife owned and operated.  This is 
  Page iii  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
the first time that a defendant has been convicted after a trial in Federal court for submitting 
cGlaaipmss  ifnor D piasyamsetentr  fPorr ewpoartrheldesnse ssesr vices.   
Gaps Continue in Nursing Home Preparedness and Response During Disasters  
We found 
that from 2007 to 2010, most nursing homes nationwide met Federal requirements for 
written emergency plans and preparedness training.  However, plans lacked relevant 
information, including only about half of the tasks on the CMS checklist.  Nursing homes 
faced challenges with unreliable transportation contracts, lack of collaboration with 
local emergency management, and residents who developed health problems.  State 
long-term-care ombudsmen were often unable to support nursing home residents during 
disasters; most had no contact with residentGsa upns tCilo anfttienru teh eo d Eisxaisstt einrs N.  uSrtasitnegs  rHeopmoret ed 
mPraekpianrge dsnomeses  aenffdo rRtess tpoo ansssei sDtu nruinrgs iDngis ahsotmeress:   d2u0r0i7n g-  2d0is1a0sters, mostly related to nursing 
home compliance issues and ad hoc needs.   T
.  OEI-06-09-00270.  April 2012.  
FVualcl cTienxet. s   Mismanaged in Storage 
Vulnerabilities in Vaccine Storage and Management Threaten Efficacy  
A June 2012 report 
revealed that providers in the Vaccines for Children (VFC) program exposed vaccines in 
storage to inappropriate temperatures, which could reduce vaccine potency and efficacy, 
increasing the risk that children are not provided with maximum protection against 
preventable diseases.  The VFC program is a Medicaid benefit that provides free vaccines to 
eligible children.  CMS delegates the programs implementation to the Centers for Disease 
Control and Prevention (CDC), which purchases VFC vaccines and distributes them to VFC 
providers.  We found that vaccines stored by 76 percent of 45 selected providers were 
exposed to inappropriate temperatures for at least 5 cumulative hours.  We also found 
expired vaccines stored together with nonexpired vaccines, increasMinegd itchaeid r iVsakc ocifn mesi sftoark enly 
Cadhmildirneinst Perrionggr athme:  e Vxapcirceinde v Satcocriangee.   aTnhde  Msealneactgeedm pernotviders generally did not meet vaccine 
management requirements or maintain required documentation.  
.  OEI-04-10-00430.  June 2012.  
5Fu0l-l YTeexatr.   E  xclusion for Involuntary Manslaughter 
Michael Jacksons Physician Excluded from Medicare, Medicaid, and All Federal Health 
Care Programs for a Minimum of 50 Years (California)  
Conrad Murray, pop singer 
Michael Jacksons doctor, was excluded from participation in Federal health care programs 
for a minimum of 50 years after being convicted of involuntary manslaughter.  Murray was 
sentenced to 4 years of incarceration, ordered to pay $101,827,871 in restitution, and 
ordered to cease and desist from practicing medicine in California.  
   
  Page iv  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
Medicare Wasteful Spending 
 
 
Wasteful spending occurs when Medicares laws, policies, and methodologies fail to ensure 
that program costs are reasonable and appropriate and fail to reflect Medicares role as a 
hFilgahw-veodlu Pmaey, mpruednetn Mt inestuhroerd/oplaoygerie ins  t h e health care marketplace.  
  Payments  for Evaluation and Management Services Do Not Always Reflect the Actual 
Services Provided 
 Reviews of Medicare claims for cardiovascular and musculoskeletal 
surgeries in 2007 revealed that Medicares payment methodology often did not reflect 
the actual number of preoperative and postoperative physician evaluation and 
management (E/M) services actually provided to beneficiaries, resulting in wasteful 
spending.  The physician fee schedule includes global surgery fees for the surgical 
service and the related E/M services provided during the global surgery period, which, 
for major surgeries, includes the day before the surgery, the day of the surgery, and the 
90 days after the day of the surgery.  In determining a global surgery fee, Medicare 
estimates the number of E/M services that physicians provide to typical beneficiaries 
receiving such surgeries and compensates physicians regardless of the E/M services 
actually provided.  For the two types of surgeries, we estimated that Medicare paid a net 
Cardiovascular Global Surgery Fees Often Did Not Reflect the Number of Evaluation and 
$63 million in E/M services that were not provided in 2007.    
Management Services Provided
Musculoskeletal Global Surgery Fees Often Did Not Reflect the Number of Evaluation and 
.  A-05-09-00054.  May 2012.  Full Text.  
Management Services Provided
  Medicare Pays Too Much for the Drug Avastin When Used in Treating Wet Age-Related 
.  A-05-09-00053.  May 2012.  Full Text.   
Macular Degeneration 
 We found that for the first quarter of 2010, physicians could 
purchase Avastin at 53 percent below the average Medicare payment for providing the 
drug in treating wet age-related macular degeneration (wet AMD) in physician office 
settings.  Wet AMD is a leading cause of vision loss in older people.  Wasteful spending 
has occurred because Medicare does not have a national payment amount for such use 
of Avastin.  Medicares payMmeednicta croen Ptaraycmtoenrst si nfodre Dperungdse nUtsleyd s teot  Tthreea pta Wymete Angt ea-mReoluatnetds , 
wMhaiccuhla dri fDfeergeedn earsa mtiounch as 28 percent.  CMS set a national payment amount for Avastin 
but rescinded it in 2009.  
.  OEI-03-10-00360.  April 2012.  Full Text.  See also OIG report 
A-01-10-00514, September 2011. 
Medicare Improper Payments and Fraudulent Billings 
 
Improper payments in Medicare and Medicaid commonly fall into four categories:  
unsupported services, medically unnecessary services, incorrect billings, and other 
noncovered cost or error types.  Some of these core payment issues result from fraudulent 
behavior.  Many claims are questioned and disallowed because providers do not maintain 
  Page v  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
required documentation or sufficient documentation to support the services and amounts 
cInlapimateide. nt Rehabilitation Facilities 
Overpayments Caused by Failure To Detect Late Transmissions of Patient Assessment 
Instruments  
A September 2012 report revealed that Medicares contractors overpaid 
88 of 108 sampled claims (about 81 percent) submitted by inpatient rehabilitation facilities 
(IRF).  The errors occurred because the contractors failed to detect from the claims that the 
required patient assessment instruments (PAI) were submitted late.  If PAIs are submitted 
late, payments should be reduced by 25 percent.  We estimated that for services provided in 
CYs 2009 and 2010, Medicare overpaid about $8.4 million to IRFs for claims associated with 
late PAIs.  PAIsM ceodnitcaairne  tOhvee irnpfaoirdm Inatpiaotni eMnte dRiechaarbei nlietaetdios nto F parcoilpiteiersly M aidllmioinnsi sotfe Dr othllea rIsR fFo r 
Cplraoismpse ctiivteh  pLaaytem Peantti esnyts tAesmse. s sOmne anvte Irnasgteru, ImReFnst tsr faonrs CmYist t2e0d0 t9h aen rde q2u0i1r0ed PAIs 70 days after 
the deadline.  
W .  A-01-11-00534.  
SMepetdemicbael rE 2q0u1i2p. m Fuelnl Tt eSxut. pplier Scheme 
Two Sentenced to a Combined 17 Years, Ordered To Pay Restitution (Georgia) 
 Arthur 
Manasarian and Sahak Tumanyan were sentenced in a Medicare fraud scheme.  Manasarian, 
who opened a durable medical equipment company, Brunswick Medical Supply (BMS), stole 
the identities of hundreds of Medicare beneficiaries and physicians from multiple states and 
submitted claims to Medicare for DME that was never provided.  Tumanyan also engaged in 
numerous fraudulent financial transactions designed to deliberately conceal the proceeds 
from the fraudulent Medicare claims.  Manasarian was sentenced to 12 years of 
incarceration and ordered to pay over $1.8 million in restitution, jointly and severally, while 
Tumanyan was sentenced to 5 years of incarceration and ordered to pay $308,963 in 
restitution, jointly and severally.  Additionally, Manasarian and Tumanyan were each 
excluded by OIG for 20 years and 15 years, respectively.  The investigation of this scheme, 
which was worked jointly with U.S. Immigration and Customs Enforcement, the Federal 
Bureau of Investigation, and the Los Angeles County Sheriffs Office, has led to more than 
3N5o anrcreosmts.p  liant Data Used in Calculations 
Diagnosis-Related Data and Documentation Used in Risk Score Calculations Did Not Comply 
With Federal Requirements 
 Reports issued in May and September 2012 revealed that two 
Medicare Advantage (MA) organizations were overpaid in 2007 under Medicare Part C 
because the diagnoses and/or supporting documentation that they submitted to CMS for 
use in CMSs risk score calculations did not always comply with Federal requirements.  CMS 
uses risk scores to adjust the monthly capitated payments to MA organizations for the next 
Risk Adjustment Data Validation of Payments Made to Pacifi are of Texas for Calendar Year 
payment period.   
2007(Contract Number H4590)
C
Risk Adjustment Data Validation of Payments Made to Paramount Care, Inc., for CY 2007
  .  A-06-09-00012.  May 2012.  Full Text.   
(Contract No. H3653)
 
.  A-05-09-00044.  September 2012.  Full Text. 
  Page vi  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
C  laims With Questionable Billing Characteristics 
 
We reviewed claims for three provider types to identify those that exhibited questionable 
billing.  Questionable billing refers to claims that exhibit certain characteristics that may 
indicate fraud.  We identified and reviewed those that had a high percentage of claims that 
  Community Mental Health Centers  
met at least one of the questionable billing characteristics. 
Our report revealed that in 2010, about half of 
community mental health centers (CMHC) met or exceeded thresholds that indicated 
unusually high Medicare billing for at least one of nine questionable billing 
characteristics related to partial hospitalization programs (PHP).  PHPs are intense, 
structured, outpatient mental healtQhu tersetaiotmnaebnlte  pBriollginragm bys .C  Wome mfouunnidty t Mhaetn atablo Hute alth 
9Ce0n pteerrscent of CMHCs with questionable billing were located in States that do not require 
CMHCs to be licensed or certified.  
  Medicare Part D Retail Pharmacies 
.  OEI-04-11-00100.  August 2012.  Full Text.   
 We found that over 2,600 retail pharmacies had 
extremely high billing for at least 1 of the 8 measures we developed.  For example, many 
pharmacies billed extremely high dollar amounts or numbers of prescriptions per 
beneficiary or per prescriber.  This could mean that a pharmacy is billing for drugs that 
are not medically neceRsestaarily P ohra wrmeraec ineesv Weri tphr Qovuiedsetido ntoa bthlee  Pbaernte Dfi cBiiallriyn. g The Miami, 
Los Angeles, and Detroit areas were the most likely to have pharmacies with 
questionable billing.   .  
  Home Health Agencies With Inappropriate and Questionable Billing 
OEI-02-09-00600.  May 2012.  Full Text.  
 We found that 
about one in every four home health agencies (HHA) exceeded a threshold that 
indicated unusually high billing for at least one of our six measures of questionable 
billing.  We examined home health claims with three specific errors:  overlapping with 
claims for inpatient hospital stays, overlapping with claims for skilled nIunraspipnrgo fparciialittey  
satnady sQ, uoers btiiollninagb lfeo Br islelirnvgi cbeys M oned dicaateres  aHfotemre b Heneaefltichi aArgieensc dieesa. t hs.  HHAs with questionable 
billing were located mostly in Texas, Florida, California, and Michigan.  
OEI-04-11-00240.  
August 2012.  Full Text. 
Medicare Collections, Reconciliations, 
and Program Integrity 
Uncollected Overpayments   
Obstacles to Medicares Collection of Identified Overpayments 
 As of October 2010, 
Medicare had not recovered $332,119,044 (80 percent) of $416,287,546 it had agreed to 
collect.  OIG identified the overpayments in audits during FYs 2007 and 2008 and the first 
6 months of FY 2009.  Collection efforts were obstructed by time constraints imposed by the 
statute of limitations.  Also, Medicare contractors lacked adequate guidance for collecting 
overpayments, and CMS did not have an effective system for monitoring contractors 
collection efforts.  We identified inaccuracies and could not verify the $84.2 million that CMS 
  Page vii  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
  Obstacles to Collection of Millions in Medicare Overpayments
 
reported collecting.   .  
AU-n0r4e-1c0o-n03ci0l5e9d.   HMoays p2i0t1a2l .O  Fuutlll iTeerx tP. a  yments 
Medicare Failed To Reconcile and Settle Hospital Outlier Payments 
 CMS did not reconcile 
overpayments and underpayments of hospital outlier payments associated with 292 of 305 
cost reports we reviewed.  Outlier payments are designed to protect hospitals from 
excessive losses due to unusually high-cost cases.  Because CMS did not reconcile the cost 
reports, amounts that hospitals owed to Medicare and that Medicare owed to hospitals were 
unknown and outstanding at the conclusion of our fieldwork and Medicares contractors 
could not settle the cost reports.  Audits by the Medicare contractors before reconciliation 
estimated that outlier payments were due from hospitals to Medicare for 236 of the 292 
cost reports (about 81 percent) and that outlier payments were due from Medicare to 
hCMosSp Ditiadls N footr  Rtheeco ontchieler  M56e dciocsatr ere Opuotrlties.r   PPaayymmeennttss  ionw Aecdco trod Manecdei cWariteh b Fye hdoersapli tRaelsg,u alalotniogn ws ith 
aasnsdo Gciuaitdeadn icneterest, represent funds that should be returned to the Medicare Trust Fund.  
Zone Progra.  mA- 0I7n-t1e0g-0ri2t7y6 C4o.  nJutnrea c2t0o1r2s.   Full Text.   
CMSs Oversight of ZPIC-Related Conflicts of Interest Inadequate  
A July 2012 report 
revealed that some Zone Program Integrity contract (ZPIC) offerors (companies that submit 
proposals for ZPIC contracts) and their subcontractors failed to provide all the requisite 
information regarding financial interests in other entities.  Also, descriptions of the conflicts 
of interest presented were often unclear, and some did not distinguish actual conflicts from 
possible conflicts.  Offerors and their subcontractors often had business and contractual 
relationships Cwointhfl iCcMts Sa nand dF iwnaitnhc oiathl Rere loaftfieornosrhsi,p bsu Atm raornegly P cootennstidiaelr Zeodn teh Pemro gtora bme  aInctteugarl ity 
cCoonnftlriactcst.o  rCsMS does not have a written policy for reviewing conflict and financial interest 
information.  
Medicare-. M OEeId-0ic3a-1id0- 0D0a3t0a0 M.  Jualtyc 2h0 P12ro.  gFurallm Te x  t.   
Administrative Limitations Hinder Effectiveness  
An April 2012 OIG report revealed that 
during 2007 and 2008, the Medicare-Medicaid (Medi-Medi) Data Match program produced 
limited results and few fraud referrals.  The Medi-Medi program enables PSCs and 
participating State and Federal Government agencies to collaboratively analyze billing 
trends across the Medicare and Medicaid programs to detect aberrant billing patterns that 
may not be evident when analyzing the data separately.  Historically, data sharing between 
Medicare and Medicaid has been limited.  Our report describes several limitations in the 
administration of the Medi-Medi program that may have diminished the programs 
potential.  The program, which began as a pilot in 2001, is intended to enable Medicare and 
participating State and Federal Government agencies to collaboratively analyze billing 
trends across Medicare and Medicaid to identify potential fraud, waste, and abuse.  During 
the period of our review, only 10 States had chosen to participate.  Two of the States 
withdrew, finding that the program offered them minimal expenditure avoidance and 
recoupment of Medicaid funds.  Of expenditures recouped through the program during 
2007 and 2008, more than three quarters was recouped for Medicare.  
  Page viii  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
T  he Medicare-Medicaid (Medi-Medi) Data Match Program
 
.  OEI-09-08-00370.  April 2012.  
Full Text.   
Medicaid Payments and Oversight   
 
States have considerable flexibility in designing and operating their Medicaid programs;   
however, to receive a Federal share of Medicaid costs, applicable State and Federal 
rIneqteuirrmemeednitast me uCsat rbee  Fmaect.i lities 
Daily Rates for Certain State-Operated Developmental Centers May Be Excessive  
(New York) 
 New Yorks Medicaid daily rate for 15 selected State-operated Intermediate 
Care Facilities (ICF) for individuals with intellectual and developmental disabilities 
(developmental centers) may not have met the Federal requirement that payments be 
consistent with economy and efficiency.  The daily rate for Medicaid beneficiaries to reside 
in the selected developmental centers grew from $195 per day in SFY 1985 to $4,116 per 
day in State FY 2009, which is the equivalent of $1.5 million per year for one Medicaid 
beneficiary.  The developmental center rate was more than nine times the average rate for 
all other State-operated and privately operated ICFs in State FY 2009.  The growth occurred 
because the States rate-setting methodology significantly inflated the Medicaid daily rate 
for the developmental centers and CMS did not prevent the rate from increasing to its 
current levels.  If the State had used prior year actual costs as the starting point in its rate 
Mmeedthicoadido lRoagtye isn fsotre Nade wof Y iotsr kc uSrtareten-tO mpeertahtoedd  iDne cvaellcouplmateinngta tlh Cee dnateilrys  rMataey,  tBhee E Fxecdeessriavle 
Government might have saved over $700 million in reimbursements in State FY 2009.  
.  
AH-C0B2-S1 1W-0a1i0v2e9r.s  MaNy o2n01c2o.m  Fupllli aTenxtt .P   roviders (New Jersey) 
Individual Plans of Care, Documentation, Policies, and Procedures Insufficient  
Three 
reports issued in this semiannual period revealed that claims for Federal reimbursement 
for Medicaid home and community-based care (HCBS) in New Jersey and New York were 
unallowable for not meeting certain Federal and State requirements.  Policies and 
procedures for overseeing and administering the waiver programs were not adequate to 
ensure that providers claimed reimbursement only for services actually provided and 
maintained all the required documentation to support the services billed and to ensure that 
waiver program services were provMideeddic taoid b Penayemficeinatrsi efso ro Snelyrv wichees nU pnudersr uNaenwt  tJoe rwseryitst eSne ction 
1p9la1n5sc o Cfo cmarme.u  nTihtye  CNaerwe  WJearsiveeyr .report revealed an estimated $60,740,637 in improperly 
claimed Federal reimbursements   
  A-02-10-01029.  April 2012.  Full Text.   (See also New York 
reports A-02-10-01027 and A-02-10-01002.)   
  Page ix  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
P  art B PremiumsClaims for Federal Share of State-Paid Premiums 
 
(Nevada) 
Documentation and Eligibility Issues Associated With States Improper Part B Premium 
Payments.
  Nevada did not always comply with Federal requirements when claiming 
Federal reimbursement for Medicare Part B program (Part B) premiums that it paid on 
behalf of Medicaid beneficiaries. Federal law allows State Medicaid programs to enter into 
an arrangement with CMS known as the buy-in program.  The buy-in program allows a 
participating State Medicaid program to enroll certain dual eligibles (individuals who are 
entitled to both Medicare and some form of Medicaid benefits) in Part B and to pay the 
monthly premiums on their behalf.  The State may then claim the monthly premium 
Nexepveanddai Itmurperso fpoerr Flye Cdleariaml eredi mFebduerrasel mReeinmtb.  uWrsee imdeenntt iffoierd M neudmicearroe uPsa irmt Bp rPorpeemri culmaism Psa fiodr  n 
BFeedhearlfa ol fr eMimedbiucarisde mBeennetf ibcyia Nrieevsada and set aside additional amounts for resolution.  
o
Onsite Review of Medicaid.   AF-r0a9u-1d1 C-0o2n0t2r4o. l  JUulny i2t0  12.  Full Text. 
Onsite Review of Medicaid Fraud Control Unit (New York) 
 OIG is responsible for overseeing 
the activities of all State Medicaid Fraud Control Units (MFCU or Unit) and publishes 
periodic onsite review reports.  From fiscal years 2008 to 2010, the New York MFCU filed 
criminal charges against more than 400 defendants, obtained more than 400 convictions, 
and was awarded more than $750 million in recoveries.  Our review found a number of 
noteworthy practices, including the Units approach to patient abuse and neglect cases, its 
list of ongoing investigations (created to avoid conflicts among inveMsetidgiacatiindg N aegwen Ycoireks )S, taanted  
iMtse duiscea oidf  tFercahundo Cloognyt.r o Ol uUrn rite:p 2o0rt1 i1n Oclnusditees  Rfienvdieinwgs and recommendations with respect to 
staff size, training, file maintenance, and policies and procedures.  
  .  OEI-02-11-00440.  June 2012.  Full Text.   
Public Health and Human Services Reviews  
 
Our public health and human services work reflects some of HHSs top management 
challenges related to administration of contracts and grants management.  OIG also plays a 
sHigRnSiAficsa nHt eroallet hin  Ccheinldt esurp Pproorgt eranfmor cement activities.  
Multiple Issues Found With a Grantees Claims and Financial Performance 
 The Health Center 
Program is administered by the Health Resources and Services Administration (HRSA).  Our 
September 2012 report revealed that for selected grants and budget periods, Soundview 
Health Care Network, a nonprofit grantee organization that operates a network of five 
health centers, claimed Federal grant expenditures totaling $113,603 that were unallowable 
because of deficiencies in its internal controls.  We could not determine the allowability of 
an additional $5,211,598 claimed.  Some of the funds were not accounted for separately 
from other operational funds, the grantees cash balances were significantly lower than the 
recommended 60-day minimum, and there were indications the grantee did not have 
enough cash on hand to pay its short-term liabilities.  We also found problems with the 
  Page x  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
  Soundview Health Care Network Did Not Meet Select Financial Performance 
Mgreaanstuereess  lainqdu iCdliatyim, aecdc oUunnatlslo rwecaebilvea Fbeled ecroalll eGcrtaionnt sE axnpden fdoiutnurde as decline and net loss in 
earnings.  
Head Start Program Eligibility  .  A-02-11-02004.  Full Text. 
The Administration for Families and Children (ACF) Strengthened Its Oversight of Head Start 
Program Eligibility Between FY 2010 and FY 2011 
 ACF altered its FY 2011 triennial reviews 
to determine whether grantees kept on file the source documents proving childrens 
eligibility and began performing unannounced reviews.  ACF promulgated draft regulations 
that, once final, will require grantees to keep eligibility documents on file.  We found that 
ACF was not consistent in issuing findings to grantees missing eligibility information in 
FY 2011 and that, in FY 2012, ACF took action to reduce this variation when issuing 
findings.  Also, ACF developed an online complaint process for the Head Start program to 
capture complaints that could help the agency uncover problems with grantees.  Our review 
was a followup to Government Accountability Office (GAO) testimony at a May 2010 
congressional hearing aboutM peomteonrtainadl uelmig iRbeipliotyrt f:r  aAuCdF  aStt reeignhgtt hHeenaedd  SIttsa rOtv gerrasnigthete so.f   HAte athde  
Ssatamrte  Ehleigairbinilgit,y A iCnF F cisocmalm Yeitater d2 0to1 1improving its oversight of eligibility.  Our report did not 
contain recommendations.  
Child Support Enforcement .  OEI-05-11-00140.  June 2012.  Full Text.   
Former NFL Player Andre Rison Sentenced for Failing To Pay Child Support (Arizona) 
 One of 
OIGs most wanted deadbeat parents, Andre Rison, was sentenced to 5 years of probation 
and ordered to pay restitution of $322,992 for failure to pay child support.  Rison, a former 
National Football League (NFL) wide receiver, was ordered by a court in May 1999 to make 
monthly child support payments of $2,358 for his son.  Despite earning an NFL salary for 
more than a decade, Rison admitted that he willfully and unlawfully failed to pay child 
support for more than 5 years.  
  Page xi  HHS Office of Inspector General  Inspector Generals 
Semiannual Report to Congress  Fall 2012  Message and Highlights 
 
 
OIG Participation in Congressional Hearings 
9-20-2012 
 
John Hagg, Director of Medicaid Audits, testified 
before two subcommittees of the U.S. House of 
Representatives (House) Committee on 
Oversight and Government Reform on Medicaid 
 John Hagg, Director, 
payment rates for State-operated developmental  Medicaid Audits 
 
centers in New York.  Testimony.   
6-14-2012 
Ann Maxwell, Regional Inspector General for 
Evaluation and Inspections, testified before the 
United States Senate (Senate) Committee on 
Homeland Security and Governmental Affairs,  Ann Maxwell, Regional 
Subcommittee on Federal Financial  Inspector General for 
 
Management, Government Information, Federal  Evaluation and 
Inspections, Chicago 
Services, and International Security, on saving 
  
taxpayer dollars by curbing waste and fraud in 
6-08-2012  Medicaid.  Testimony. 
 
Robert A. Vito, Regional Inspector General for 
Evaluation and Inspections, testified before the 
House Committee on Energy and Commerce, 
 
Subcommittee on Oversight and Investigations,  Robert A. Vito, Regional 
on Medicare contractors efforts to fight fraud.   Inspector General for 
Testimony.  Evaluation and 
Inspections, Philadelphia 
 
 
6-07-2012 
Ann Maxwell, Regional Inspector General for 
Evaluation and Inspections, testified before the 
House Committee on Oversight and Government 
 
Reform, Subcommittee on Government  Ann Maxwell, Regional 
Organization, Efficiency and Financial  Inspector General for 
Management, on assessing Medicare and  Evaluation and 
Inspections, Chicago 
Medicaid program integrity.  Testimony. 
 
4-24-2012 
Daniel R. Levinson, Inspector General, testified 
before the Senate Committee on Finance on the 
anatomy of a fraud bust from investigation to 
 
conviction.  Testimony.   Daniel R. Levinson, 
  Inspector General 
 
  Page xii  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Table of Contents 
 
 
Contents 
 
 
Medicare Program Reviews ---------------------------------------- 1
Avoid Wasteful Spending---------------------------------------------------- 1 
Evaluation and Management Services --------------------------------- 1 
Part B DrugsAvastin ---------------------------------------------------- 2 
Part B DrugsAverage Sales Price ------------------------------------- 2 
Laboratory Tests ----------------------------------------------------------- 3 
Identify and Reduce Improper Payments ------------------------------- 3 
HospitalsOutpatient Payments Exceeding Charges --------------- 3 
HospitalsOutpatient Billings Associated With Inpatient Stays - 4 
Inpatient Rehabilitation FacilitiesReductions for Late 
Transmissions --------------------------------------------------------- 5 
Community Mental Health CentersPartial Hospitalization 
Programs --------------------------------------------------------------- 6 
Home Health AgenciesUnusually High Billings -------------------- 6 
PhysiciansEvaluation and Management Services ----------------- 7 
Medical Equipment and SuppliesUnsupported Claims ---------- 7 
Medical Equipment and SuppliesDiabetes-Related Supplies --- 8 
Medical Equipment and SuppliesVacuum Erection Systems ---- 8 
Part B DrugsBilling of Incorrect Units of Service (Herceptin) -- 9 
Medicare Reconciliations and Collections ----------------------------- 10 
Unreconciled Hospital Outlier Payments ----------------------------- 10 
Uncollected OverpaymentsObstacles to Collection -------------- 11 
Uncollected Overpayments Home Health Agencies ------------- 11 
Program Integrity Initiatives and Contractors ----------------------- 12 
Medicare-Medicaid Data Match Program----------------------------- 12 
Zone Program Integrity ContractorsConflicts of Interest ------- 12 
Medicare Part C  Medicare Advantage -------------------------------- 13 
Part C Risk Score Calculations --------------------------------------- 13 
Medicare Part D (Prescription Drug Benefit) ------------------------- 14 
Part DRetail Pharmacies ---------------------------------------------- 14 
Part DSchedule II Drugs ---------------------------------------------- 15 
Part DDuplicate Payments for Hospice-Covered Drugs --------- 15 
Part DTrOOP Miscalculations ---------------------------------------- 16 
Part D FormulariesDual Eligible Beneficiaries ------------------- 16 
  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Table of Contents 
 
 
Patient Safety and Quality of Care --------------------------------------- 17 
Nursing HomesInadequate Resident Assessments and Care 
Plans -------------------------------------------------------------------- 17 
Nursing HomesDisaster Preparedness and Response ---------- 18 
Other CMS-Related Re views ---------------------------------------------- 18 
Electronic Health RecordsCoding of Evaluation and 
ManagementServices ----------------------------------------------- 18 
Contract AdministrationRetirement Plan, Termination Costs - 19 
End Stage Renal Disease Program Networks ------------------------ 19 
 
Medicaid Program Reviews -------------------------------------- 21
Medicaid Wasteful Spending --------------------------------------------- 21 
Developmental CentersExcessive Daily Rates -------------------- 21 
RebatesMedicaid Managed Care ------------------------------------ 22 
Improper State Claims  for Federal Reimbursement ---------------- 22 
HCBS WaiversRoom-and-Board Costs ----------------------------- 23 
HCBS WaiversNoncompliant Providers ---------------------------- 23 
Personal Care ServicesNoncompliant Providers ----------------- 24 
Adult Mental Health RehabilitationMultiple Deficiencies ------ 25 
Family PlanningPharmacy and Sterilization Claims ------------- 25 
Part B PremiumsClaims for State-Paid Premiums --------------- 26 
Medicare Deductibles and CoinsuranceState Plan Rates ------- 27 
Administrative CostsUnallowable Provider Training Costs ---- 27 
Quarterly Statements and Adjustments ------------------------------- 27 
Adjustments Made at Improper Rate --------------------------------- 28 
Calculation, Documentation Errors ------------------------------------ 28 
Adjustments for Excess Contractor Profits --------------------------- 28 
Adjustments for State Collections of Overpayments --------------- 29 
Overpayments Not Fully Reported ------------------------------------ 29 
Federal Share of Collections Improperly Retained ----------------- 30 
Managed CareFederal Share of Excess Capitation Payments -- 30 
Prevent and Detect Medicaid Fraud and Abuse ---------------------- 31 
Program IntegrityAudit Medicaid Integrity Contractors-------- 31 
Program IntegrityExcluded Individuals in Managed Care ------ 32 
Program IntegrityState Medicaid Fraud Control Units ---------- 32 
Medicaid Beneficiary Safety  and Quality of Care -------------------- 33 
Quality of Care for Waiver Program Beneficiaries ------------------ 33 
Childrens Health Insurance Program ---------------------------------- 34 
CHIPConcurrent Enrollments ---------------------------------------- 34 
CHIPInadequate Cost Tracking, Reconciliation Errors ---------- 34 
  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Table of Contents 
 
 
Legal and Investigative Activities  Related to Medicare 
 
and Medicaid -------------------------------------------------------- 37
Investigative Outcomes ---------------------------------------------------- 37 
Advisory Opinions and Other Industry Guidance -------------------- 39 
Health Care Fraud Prevention and Enforcement Action Team 
Activities ---------------------------------------------------------------------- 39 
HEAT Provider Compliance Training ---------------------------------- 39 
Medicare Fraud Strike Force Activities ------------------------------- 40 
Other Criminal and Civil Enforcement Activities -------------------- 41 
Special Assistant U.S. Attorney Program ------------------------------ 41 
Most Wanted Fugitives Listed on OIGs Website -------------------- 42 
Most Wanted Deadbeat Parents ---------------------------------------- 42 
Recently Completed Cases and Settlements -------------------------- 43 
Medical Equipment and Supplies -------------------------------------- 43 
Pharmaceutical Companies --------------------------------------------- 44 
Quality of Care ------------------------------------------------------------- 46 
Laboratories --------------------------------------------------------------- 46 
Clinics ----------------------------------------------------------------------- 47 
Hospitals ------------------------------------------------------------------- 47 
Physicians ------------------------------------------------------------------ 48 
Home Health Agencies --------------------------------------------------- 48 
Hospice Care --------------------------------------------------------------- 49 
Managed Care ------------------------------------------------------------- 49 
Physical Therapy ---------------------------------------------------------- 50 
Identity Theft -------------------------------------------------------------- 50 
Misuse of Grant Funds --------------------------------------------------- 51 
Medicaid Fraud Control Units -------------------------------------------- 51 
Funding and Accomplishments ---------------------------------------- 51 
Joint Investigations ------------------------------------------------------- 51 
Sanction Authorities and Related Administrative Actions --------- 53 
Program Exclusions ------------------------------------------------------ 53 
Corporate Integrity Agreements --------------------------------------- 55 
Civil Monetary Penalties Law ------------------------------------------- 55 
Patient Dumping ---------------------------------------------------------- 56 
Provider Self-Disclosure Protocol --------------------------------------- 56 
 
Public Health Reviews -------------------------------------------- 59
Public Health Agencies  Management and Program Oversight --- 59 
CDCVaccines Mismanaged in Storage ------------------------------ 59 
  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Table of Contents 
 
 
FDAMedical Devices --------------------------------------------------- 59 
HRSAHealth Center Program ---------------------------------------- 60 
NIHGrants and Contract Management ----------------------------- 61 
NIHSuperfund Appropriations -------------------------------------- 61 
NIHCompliance With Appropriations Laws ---------------------- 62 
Public Health-Related Legal Actions and Investigations ----------- 63 
Health Education Assistance Loan Program ------------------------- 63 
HEAL Exclusions ---------------------------------------------------------- 63 
 
Human Services Reviews ----------------------------------------- 64
Administration for Children and Families ----------------------------- 64 
Oversight of Head Start Eligibility ------------------------------------- 64 
Child Support Enforcement --------------------------------------------- 64 
Investigative Outcomes -------------------------------------------------- 65 
Engaging the Public in Capturing Deadbeat Parents --------------- 65 
Administration for Community Living --------------------------------- 65 
Senior Medicare Patrol Projects ---------------------------------------- 65 
 
Other HHS-Related Reviews ------------------------------------- 66
Compliance With Executive Orders ------------------------------------- 66 
HHS High-Dollar Improper Payments --------------------------------- 66 
Non-Federal Audits --------------------------------------------------------- 67 
Recovery Act Retaliation Complaint Investigations ----------------- 68 
Contract Audits ------------------------------------------------------------- 68 
Legislative and Regulatory Reviews ------------------------------------ 69 
 
 
  HHS Office of Inspector General   
Semiannual Report to Congress  Fall 2012  List of Appendixes 
 
 
List of 
Appendixes 
 
 
 
Appendix A  Cost Savings Supported by 
(p. 71)
OIG Recommendations   
Appendix B  Questioned Costs and Funds To Be 
(p. 76)
Put to Better Use   
(p. 84)
Appendix C  Peer Review Results   
Appendix D  Summary of Sanction Authorities 
(p. 86)
 
(p. 89)
Appendix E  Reporting Requirements   
Appendix F  Anti-Kickback StatuteSafe Harbors 
(p. 91)
 
   
   
 
   
    HHS Office of Inspector General   
Semiannual Report to Congress  Fall 2012  List of Appendixes 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  https://oig.hhs.gov 
 
 
 
    HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
Selected acronyms and abbreviations used in this major section: 
Medicare Program Reviews 
  
AMP  average manufacturer price  HHA  home health agency 
ASP  average sales price  HHS  U.S. Department of Health and 
CMS  Centers for Medicare & Medicaid    Human Services 
  Services  MA  Medicare Advantage (Part C) 
E/M  evaluation and management  PDP  prescription drug plan  
  (services) 
Avoid Wasteful Spending 
 
Wasteful spending occurs when Medicares laws, policies, and 
methodologies fail to ensure that program costs are reasonable and 
appropriate and fail to reflect Medicares role as a high-volume, prudent 
Einvsaulruera/tpioayne ra innd t hMe haenaaltghe cmaree nmta Srkeertvpilcaeces.    
Payments in Global Surgery Periods Do Not Always Reflect the Actual Services 
Provided 
 Reviews of Medicare claims for cardiovascular and 
musculoskeletal surgeries in 2007 revealed that Medicares payment 
methodology often did not reflect the actual number of preoperative and 
postoperative physician evaluation and management (E/M) services actually 
provided to beneficiaries, resulting in wasteful spending.  For the two types 
of surgeries, we estimated that Medicare paid a net $63 million in E/M 
services that were not provided in 2007.   
The physician fee schedule includes global surgery fees for the surgical 
service and the related E/M services provided during the global surgery 
period, which for major surgeries, includes the day before the surgery, the 
day of the surgery, and the 90 days after the day of the surgery.  In 
determining a global surgery fee, CMS estimates the number of E/M services 
that physicians provide to typical beneficiaries receiving such surgeries and 
compensates physicians regardless of the E/M services actually provided.        
RecommendationsMedicare could realize savings by adjusting the 
estimated number of E/M services within global surgery fees to reflect the 
actual number of such services being provided to beneficiaries or by using 
the results of this audit during the annual update of the physician fee 
Cardiovascular Global Surgery Fees Often Did Not Reflect the 
schedule.   
Number of Evaluation and Management Services Provided
Report 1
.  A-05-09-00054.  
April 2012.  Full Text.  
  Page 1  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
  Musculoskeletal Global Surgery Fees Often Did Not Reflect the 
  Number of Evaluation and Management Services Provided
Report 2
.  A-05-09-00053.  
MPaaryt 2 B0 1D2r. u Fgusll TeAxtv. a  stin  
Medicare Pays Too Much for the Drug Avastin When Used in Treating Wet 
Age-Related Macular Degeneration.  
We found that for the first quarter of 
2010, physicians could purchase Avastin at 53 percent below the average 
Medicare payment for providing the drug in treating wet age-related 
macular degeneration (wet AMD) in physician office settings.  Wet AMD is a 
leading cause of vision loss in older people.  Wasteful spending has occurred 
because Medicare does not have a national payment amount for such use of 
Avastin.  Medicares payment contractors independently set the payment 
amounts, which differed as much as 28 percent.    
The Centers for Medicare & Medicaid Services (CMS) set a national payment 
amount for Avastin but rescinded it in 2009 because of concern that the new 
policy could cause physicians to switch from Avastin to a substantially more 
expensive (but not more effective) drug, Lucentis, resulting in even higher 
Medicare payments and beneficiary coinsurance.  Although physicians could 
purchase both Avastin and Lucentis at prices below their Medicare payment 
amounts, acquisition costs for Lucentis, which has a national payment 
amount, were just 5 percent below Medicares payments.  The National Eye 
Institute found Avastin to be as effective as Lucentis in treating wet AMD.  
Both Avastin and Lucentis are manufactured by Genentech.       
RecommendationsTo avoid wasteful spending for Avastin, CMS should 
establish a national payment code and a reasonable national payment 
aMmedoiucnatr ew Phaeynm tehnet ds rfourg  Disr uugses dU sfoedr  tThoe T trreeaatt mWeent tA ogfe w-Reetl aAtMedD M aancdu eladru cate 
pDheygseinceiarantsi oanbout clinical and payment issues related to Lucentis and Avastin.  
.  OEI-03-10-00360.  April 2012.  Full Text.  (See also 
PAa-0r1t- B10 D-0r0u5g1s4.  SAepvteermabgeer  S2a0l1e1s.) P  rice 
Exercising a Statutory Option Would Reduce Payments   
This statutorily 
mandated review identified Medicare Part B prescription drugs with average 
sales prices (ASP) that exceed average manufacturer prices (AMP) by at least 
5 percent.  When the ASP of a drug exceeds the AMP or another designated 
pricing point by a certain threshold (currently 5 percent), the Secretary of 
Health and Human Services (HHS) shall disregard the ASP for the drug when 
setting reimbursement amounts.  The review estimated that Medicare would 
have saved $4.6 million in the second quarter of 2012 by lowering 
reimbursement amounts for drugs that met the 5-percent threshold to 103 
percent of the AMPs.  The review also examined the potential effect of a July 
2012 proposed rule that, among other things, specifies the circumstances 
under which CMS will make AMP-based price substitutions.   
  Page 2  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
The report does not contain recommendations.  However, similar Office of 
Inspector General (OIG) pricing comparisons have contained 
recommendations, which we continue to support.  WCeo hmapvaer iisssoune odf  2F1o urth-
Qquuaarrtteerrl y2 0p1r1ic Ainvge rcaogme pSaarleisso Pnrsi cseisn caen dth Aev AerSaPg ree Mimabnuurfasectmuerenrt  Pmreictehso: d Iomlopgayc t 
ofonr  MPaerdti cBa rder uRgesim wbausr ismempleenmt feonrt eSdec ionn Jda nQuuaarryte 2r0 20051.2  
.  OEI-03-12-00410.  
ALaubguosrta 2t0o1r2y.   TFeusllt Tse xt. 
Genetic Testing Coverage and Payment Information Provided 
 Wasteful 
spending can occur when CMS does not have sufficient information to 
establish appropriate payment rates.  A June 2012 report, which responds to 
a CMS request, presents information provided to OIG through surveys and 
interviews in the areas of coverage policies, payment methods, and payment 
rates for genetic laboratory tests.  Genetic tests for predictive purposes are 
not covered by Medicare.  However, genetic tests used to diagnose or 
determine treatment in the presence of signs and symptoms of disease can 
be covered by Medicare.  We provided the results of our review for CMSs use 
in setting Medicare coverage and payment policies for genetic tests.  Because 
State Medicaid programs and private health insurance plans closely monitor 
Medicares coverage and reimbursement decisions, CMSs formulation of 
Medicare Memorandum 
reimbursement rates for genetic tests may be useful to them also.   
Report:Coverage and Payment for Genetic Laboratory Tests
The report does not contain recommendations.  
  .  
OEI-07-11-00011.  June 2012.  Full Text.   
Identify and Reduce Improper Payments 
 
An improper payment is any payment that should not have been made or 
that was made in an incorrect amount and includes overpayments and 
underpayments.  Improper payments occur when Medicare does not 
effectively identify and reduce erroneous and inappropriate billing by 
providers and suppliers prior to payment.  Commonly, the items or services 
billed are not supported by the documentation in the providers medical 
files, are not medically necessary, or were not covered by Medicare.  Also, 
aHdomsipniitsatrlastiveO eurrtoprast mieanyt b Pe aayssmoceianttesd  Ewxicthe ethdei nclgai mChs.a  rges 
Payments Significantly Exceeding Charges Prone to Errors, Improper 
Payments  
Three reviews of outpatient line items for which Medicare 
payments significantly exceeded billed charges revealed frequent errors, 
including incorrect units of services, incorrect codes, a combination of those, 
billing for unallowable services, and inadequate supporting documentation, 
  Page 3  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
causing Medicares payments for the services to be improper.  Millions of 
dollars in overpayments occurred in part because key Medicare systems did 
not have sufficient edits in place during our audit periods to identify line 
item payments that exceed billed charges by a prescribed amount to prevent 
the overpayments.      
Billed charges are the prices that a provider sets for its services.  Medicare 
uses an outpatient prospective payment system (OPPS) to pay certain 
outpatient providers.  In this method of reimbursement, the Medicare 
payment is not based on the amount that the provider charges. 
Consequently, the billed charges generally do not affect the Medicare 
prospective payment amounts.  Billed charges generally exceed the amount 
that Medicare pays the provider.  Therefore, a Medicare payment that 
significantly exceeds the billed charges is likely to be an overpayment. 
RecommendationsMedicare should recover the overpayments we 
identified (see individual reports below).  To reduce future overpayments, 
Medicare should implement the system edits we specified and use the 
results of our audits in provider education activities.    
Review of 
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Highmark Medicare Services in Jurisdiction 12 for the Period January 1, 2006, 
through June 30, 2009
.  A-07-11-04184.  April 2012.  Full Text.   
Review of 
RMeepdoicrat r2e PaOyfm 2e,1n9ts7  Esxecleecetdeidng li Cnhea itregmess f,o 1r, 6O0u9tp (aatbioenutt  S7e3r vpiecrecse Pnrto)c wesesreed  by 
iWncisocrornescitn;  $P6h.y2s imciiallnios nS eirnv oicvee Irnpsauyrmanecnet sC iodrepnotriafiteiodn f oinr  Jruerciosvdeicrtyi.o  n 5, for the 
Period January 1, 2006, Through June 30, 2009
.  A-07-11-04174.  July 2012.  
Full Text.   
Review of Medicare 
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$T2ra.2n smitiilolinoend i tno o Pvaelrmpeatytmo GenBtAs  iind eJunrtiisfideidct fioorn  r1e cForovemr yJ.a  nuary 1, 2006, through 
June 30, 2009
Hospitals. O Au-0t7p-a1t1i-e0n4t1 8B2il.l  iAnuggsu Asts 2s0o1c2i.a  tFeudll  TWexitt.h   Inpatient Stays 
Medicare Paid Twice for Outpatient Billings for Services Provided Within 3 
Days Prior to or During Inpatient Stays 
 Hospital outpatient providers 
improperly submitted to Medicare claims for services provided to 
beneficiaries within 3 days prior to or during (excluding date of discharge) 
hospital inpatient prospective payment system (IPPS) stays.  We found that 
of 127 services we reviewed, 61 (about 48 percent) were paid twiceas 
part of the IPPS and again under Part B.  Outpatient providers controls failed 
to prevent or detect incorrect billings.  In some instances, providers were 
unaware that beneficiaries had been inpatients at other facilities or were 
unaware of or did not understand Medicare requirements.  Overpayments 
  Page 4  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
also occurred because Medicares claims processing contractors were not 
aware of incoming system alerts because CMS did not notify them it had 
changed the location of this information, existing system edits did not 
prevent or detect certain incorrect payments, and the contractors incorrectly 
overrode certain edits or took no action to recover or offset overpayments 
when they received system alerts.  The errors we identified occurred during 
calendar years 2008 and 2009.   
RecommendationsCMS should instruct its contractors to recover the 
$340,073 in overpayments we identified, resolve an estimated $6.1 million 
in potential overpayments set aside for further analysis, and recover the 
overpaid amounts.  To reduce future overpayments, contractors should 
reject claims or recoup overpayments identified by edits and remind 
hospitals of the importance of adequate controls to prevent incorrect billing 
for services.  CMS should also communicate with Medicare contractors about 
changes to systems, modify existing edits to prevent payments for 
ambulance services provided durinMg eidnipcaatriee nCto snttainyus,e as nTdo  pPraeyv Tenwti cpea fyomr ents 
tNhoant pahryes aiclriaena dOyu itnpcaltuidenetd S ienr tvhicee bs aPsriocv pidreods pSehcotrivtley  pBaeyfomreen otr r Datuer ifnogr  an 
nInopnapthieynsti cSitaany outpatient services.  
Inpatient Re. h Aa-0b1il-i1t0a-t0io05n0 F8a.  cJuilnitei e2s012R.  eFudlul Tcetxiot.n   s for Late 
Transmissions  
Medicares Failure To Detect Late Transmissions of Patient Assessment 
Instruments Caused Overpayments 
 A September 2012 report revealed that 
of 108 claims submitted by inpatient rehabilitation facilities (IRF), 88 (about 
81 percent) were overpaid.  The errors occurred because Medicare 
contractors failed to detect from the claims that the required patient 
assessment instruments (PAI) were transmitted to CMS late and did not 
impose the required 25-percent reductions for late transmissions.  We 
estimated that for services provided in CYs 2009 and 2010, Medicare 
overpaid about $8.4 million to IRFs for claims associated with late PAIs.  PAIs 
contain the information Medicare needs to properly administer the IRF 
prospective payment system.  On average, IRFs transmitted the required PAIs 
70 days after the deadline.  A prior OIG review for CYs 2006 and 2007 had 
similar findings and we estimated about $20.2 million in overpayments.  
(OIG report A-01-09-00507, June 2010.)  IRFs are paid under a prospective 
payment system.         
RecommendationsCMS should adjust the $696,000 in overpayments we 
identified and resolve nonsampled claims with estimated potential 
overpayments of $7.7 million.  To reduce future overpayments, CMS should 
continue to educate IRFs on the importance of correct PAI transmission 
dates on claims, complete a process to allow systems to interface and 
iMdeednitciafyr ec lOavimersp waiidt hIn inpacotirernetc Rt ePhAaI btrilaitnastmioins sFiaocni lditaietess M, ailnlido nsus popf Dorotl lMaresd fiocra re 
contractors efforts to conduct periodic postpayment reviews of IRF claims.  
  Page 5  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
  Claims With Late Patient Assessment Instruments for CYs 2009 and 2010
 
.  
AC-o0m1-m11u-0n0i5ty3 4M.  Seenpttaeml Hbeera 2lt0h1 2C. e Fnutlle Tresxt.  P artial Hospitalization 
Programs  
Claims With High Billings and Questionable Characteristics  
In 2010, about 
half of community mental health centers (CMHC) met or exceeded 
thresholds that indicated unusually high Medicare billing for at least one of 
nine questionable billing characteristics related to partial hospitalization 
programs (PHP).  The presence of the characteristics raises questions about 
the appropriateness of the PHP claims submitted.  PHPs are intense, 
structured, outpatient mental health treatment programs.  About 90 percent 
of CMHCs with questionable billing were located in States that do not require 
CMHCs to be licensed or certified.  In the absence of licensing and 
certification requirements, dishonest individuals have an opportunity to 
establish CMHCs and improperly bill Medicare for PHP services.  During 
2010, 206 CMHCs received an estimated $218.6 million for providing PHP 
services to approximately 25,000 Medicare beneficiaries.    
RecommendationsTo reduce the potential for improper payments, CMS 
should increase its monitoring of CMHCs Medicare billing and fraud 
prevention controls, enforce the requirement that certifying physicians be 
listed on CMHCs partial hospitalization program claims, finalize and 
implement Qthuee sptrioonpaobsleed B ciollnindgit bioyn Cso omf mpaurntiitcyip Mateinotna lf oHre CaMlthH CCesn, atenrds review 
and take appropriate action against CMHCs with questionable billing that we 
identified.   .  
OHEoIm-04e- 1H1e-0a0lt1h0 0A. g Aeungcuiset s201U2.n  Fuuslul Taelxlyt.  H   igh Billings  
Billings With Questionable Characteristics Identified  
We found that about 
one in every four home health agencies (HHA) exceeded a threshold that 
indicated unusually high billing for at least one of our six measures of 
questionable billing.  In 2010, Medicare inappropriately paid an estimated 
$5 million for home health claims with three specific errorsoverlapping 
with claims for inpatient hospital stays, overlapping with claims for skilled 
nursing facility stays, or billing for services on dates after beneficiaries 
deaths.  HHAs with questionable billing were located mostly in Texas, 
Florida, California, and Michigan.   
RecommendationsTo reduce the potential for improper payments, CMS 
should implement claims processing edits or improve existing edits to 
prevent inappropriate payments for three specific errors we reviewed, 
increase monitoring of billing for home health services, enforce and consider 
lowering the 10-percent cap on the total outlier payments an HHA may 
receive annually, consider imposing a temporary moratorium on new HHA 
enrollments in Florida and Texas, and take appropriate action regarding the 
inappropriate payments we identified and HHAs with questionable billing.  
  Page 6  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
  Inappropriate and Questionable Billing by Medicare Home Health Agencies.  
 
OPEhIy-s0i4c-i1a1n-s002E40v.a  Aluuagtuisotn 2 0a1n2d.   FMulal nTeaxgte. ment Services 
Increase in Use of Service Codes That Result in Higher Reimbursements.
  
A review of coding trends for Medicare evaluation and management (E/M) 
services claims revealed that from 2001 to 2010 physicians increased their 
billing of higher level, more complex and expensive E/M codes and reduced 
their billing of lower level, less complex and expensive E/M codes in all 15 
visit types we reviewed.  In 2010, about 1,700 physicians (representing less 
than 1 percent of physicians) billed higher level, more complex and 
expensive E/M codes at least 95 percent of the time.  Between 2001 and 
2010, payments for E/M services increased by 48 percent (from $22.7 billion 
to $33.5 billion) compared to 43 percent for Part B goods and services 
generally.  Several factors contributed to the overall increases, including 
increases in thIme npurompbere rM oefd siecravriec Fees ep-rFoovr-iSdeerdv, iicnec Preaaysmeesn itns  tRheep aovret ra ge 
pMaayym 2e0n0t8 rate for E/M services, and changes in physicians billing of E/M 
codes.  CMSs 
 found that certain E/M visit types had the most improper 
payments of all Medicare Part B services.  
RecommendationsTo reduce the potential for improper payments, CMS 
should encourage its contractors to review physicians billing for E/M 
services, Mcoendticinauree  Ctoo deidnugc Tarteen pdhsy osfi cMiaendsi coanr ep Erovpaelura btiilolnin agn fdo rM sauncahg seemrveincte s, 
Saenrdv irceevsiew physicians who bill higher level E/M services for appropriate 
actions.  
Medica.  lO EEqI-u0i4p-m10e-0n0t1 a8n0.d  M Sauyp 2p0l1ie2s.  FuUll nTesxutp.  p  orted Claims  
Claims With KX Modifiers Not Supported by Required Documentation 
 A 
review of Medicare claims for four selected types of medical equipment in 
calendar year (CY) 2007 revealed claims that were unallowable because the 
suppliers did not maintain supporting documentation as required.  Suppliers 
enter a service code modifier called the KX modifier on claims to indicate 
that the services meet Medicare coverage criteria and the suppliers have the 
required documentation on file.  Of the 400 items with 2007 dates of service 
and KX modifiers, 237 (about 59 percent) did not have the required 
documentation on file.  We estimated that Medicare paid about 
$316.4 million to suppliers for insufficiently documented claims with KX 
modifiers.  While suppliers must have a written physicians order and proof 
of delivery for all medical equipment and supplies, they must have additional 
documentation on file for certain items, such as therapeutic shoes for 
diabetics, continuous positive airway pressure systems, respiratory assist 
devices, and pressure reducing support surfaces (the four categories we 
reviewed).   
RecommendationsCMS should recover the improper payments we 
identified and take appropriate action for suppliers in our sample that did 
  Page 7  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
not meet proof-of-delivery standards.  To reduce future overpayments, CMS 
should develop an alternative mechanism to help Medicare contractors 
ensure that suppliers maintain reqCuliareimd  dMoocduimfieern Dtaidti oNno,t a Pnrde visesnut eM ae sdpiceacriea l 
aFlreormt  ePmaypihnags Miziilnligo tnhse i nd oUcnuamlloewntaabtlieo nC ltahiamt ss fuoprp Sleielercst medu Dstu hraabvlee i Mn ethdeiciar lf iles 
tEoq suuippmpoenrtt use of the KX modifier.  
Medical E.  qAu-0ip4-m10e-n04t 0a0n4d.   ASpurpilp 2l0ie1s2.  FDulila Tbeextt.e   s-Related Supplies 
One or More Documentation Deficiencies Found in 76 Percent of Claims 
 
A July 2012 OIG rollup report of four reviews concluded that suppliers of 
diabetes-related supplies (home blood-glucose test trips and lancets) did not 
always comply with Federal requirements when they billed Medicare.  Of the 
400 sampled claims for test strips and/or lancets that we identified as high 
utilization claims, 303 (76 percent) amounting to about $209 million had 
1 or more deficiencies.  We found that the quantity of supplies that exceeded 
utilization guidelines was not supported with documentation of the reasons 
for the additional supplies.  We found insufficient documentation for the 
actual frequencies of testing and the treating physicians required evaluation 
of the patients diabetic control within 6 months before ordering the 
supplies.  Also, there sometimes was no supporting documentation 
indicating that refill requirements had been met and physician orders were 
missing or incomplete or proof-of-delivery records were missing. 
RecommendationsTo reduce the potential for improper payments, CMS 
should ensure that contractors implement system edits recommended in our 
individual reports, ensure that contractors are enforcing Medicare 
documentation requirements for claims for test strips and/or lancets, and 
Mcoendsiicdaerre  tChoen rterasuctltosr so fL oauckre rde vCioenwtrso wlsh Teon P dreevveelnotp Minigll iaonnds  ienv Iamlupartoinpge r 
Pcoavyemreangets a fnord  Hreigimh bUutirlsizeamtieonnt  Cploaliimcise fso rre Hlaotmede  tBol oteosdt- sGtlruicposs aen Tde slta nStcreitpss.  a  nd 
Lancets
.  A-09-11-02027.  June 2012.  Full Text.   
Additional recommendations were identified in the four source reports.  
(See reports A-09-08-00043, A-09-08-00044, A-09-08-00045, and 
AM-0e9d-i0c8a-l0 E0q0u4i6p.)m   ent and SuppliesVacuum Erection Systems 
Documentation Deficiencies Caused a 51-Percent Overpayment Rate 
 One 
selected medical equipment supplier did not meet documentation 
requirements for 51 of 100 sampled claims to Medicare for male vacuum 
erection systems, resulting in projected overpayments of $4.2 million during 
the period January 1, 2008, through December 31, 2009.  For 50 of the 
claims, the supplier did not maintain proof of delivery in its files.  The 
supplier lacked adequate internal controls to ensure that it collected and 
maintained the required documentation.  To be paid for a Medicare medical 
equipment and supplies claim, including VES, the supplier must maintain 
  Page 8  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
proof-of-delivery documents; documentation from the patients medical 
records to substantiate the necessity for the items ordered; and a signed, 
detailed written physicians order.  Nonsurgical systems known as male 
vacuum erection systems (VES), used in the treatment of erectile 
dysfunction, are designated as durable medical equipment and as such may 
be claimed and paid under Medicare.   
RecommendationsThe supplier should refund to Medicare the $4.2 million 
iPnO oSv-Te-rVpAaCy Mmeednitcsa al nDdid d Nevoet lMope eatn Md eimdicpalerem Deonct upmoleinciteast iaonnd R perqoucieredmureenst st ofo r 
hOevlepr  eHnasluf roef  Sthaamt pitle cdo Cllleacitms sa nfodr  mMaailnet Vaaincsu uthme  Erereqcutiiroend S dyostceummsentation.  
.  
AP-a0r7t- B11 D-0r5u0g1s6.  JBunileli 2n0g1 o2.f   FInucllo Trerxet.c  t  Units of Service (Herceptin) 
Most Full-Vial Billings Improper 
 Three reports issued in July and August 
2012 revealed that most payments that the Medicare contractors we 
reviewed made to health care providers for full vials of Herceptin were 
incorrect (78 percent, 81 percent, and 80 percent).  Herceptin (trastuzumab) 
is a Medicare-covered biological drug used to treat breast cancer that has 
spread to other parts of the body.  The payments were improper because the 
billing providers reported the units of service for the entire content of 1 or 
more vials, each containing 440 milligrams of Herceptin, rather than 
reporting the units of service for the amount actually administered.   
Medicares supporting systems did not have sufficient edits in place during 
our audit period to prevent or detect the improper billings.  In some 
instances, providers supporting documentation was inadequate, and in 
some cases, providers could not store unused doses for later use because 
their pharmacies incorrectly reconstituted the Herceptin.  When this 
occurred, the providers improperly billed Medicare for the entire vial, 
including waste. 
RecommendationsThe Medicare contractors should recover the identified 
overpayments (see individual reports below).  To reduce future improper 
payments, Medicares contractors should implement or update system edits 
that identify line items for multiuse-vial drugs with units of service 
equivalent to one or more entire vials, review the items to identify billing 
errors, and use the results of the audits in provider education activities.   
The Medicare Contractors Payments 
Rine Jpuorristd 1ictiOonf s3 6,9, 686,  alinnde 1 it5e tmo sP, r3o0v9id3e (r7s 8fo pre Fruclel nVti)a wls eorfe H inerccoerprteicnt ;W $e3r,e3 5O1ft,8en0 7 
iInn coovrerrepctayments identified for recovery.  
.  A-05-10-00091.  July 2012.  Full Text.   
Medicare Contractors 
PRaeypmoretn 2ts  t oO fP 2ro,5v0id7e lrisn ien i Jtuermissd, i2c,t0io2n9  1(1ab fooru tF u8l1l  Vpiearlcse onft H) werecreep tiinnc oWrerreec tO; ften 
$In2c,3or9r7e,c8t39 in overpayments identified for recovery.  
.  A-03-11-00013.  August 2012.  Full Text.   
  Page 9  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
  Medicare Contractors 
PRaeypmoretn 3ts  t oO fP 1ro,4v5id4e lrisn ien i Fteomurs ,S 1ta,1te6s5 i n(8 J0u rpisedriccetniot)n  w12e rfeo rin Fcuolrl rVeicatl;s  of 
$H1e,r5c7e6p,t3in7 4W ienr eo vOefrtepna yInmceonrrtse citdentified for recovery.  
.  A-03-11-00014. July 2012.  Full Text.   
Medicare Reconciliations and Collections 
 
Medicare contractors reconcile hospital outlier payments to ensure that 
these estimated payments made throughout the year were at the 
appropriate level.  Overpayments identified during reconciliation should be 
repaid to Medicare.  Similarly, when CMS makes a management decision to 
collect other identified overpayments (such as costs questioned in audits), 
the amounts should be repaid to Medicare.  When reconciliations and 
collections are delayed or not pursued, Medicare loses funds and possibly 
iUnnterreescto int octihleedrw Hisoes wpoitualdl  Ohauvtel ireerc oPuapyemd. ents 
Medicare Failed To Reconcile and Settle Overpayments and Underpayments of 
Outlier Payments Made Prospectively 
 CMS did not reconcile hospital outlier 
payments associated with 292 of 305 cost reports that were referred to it for 
that purpose by selected Medicare payment contractors.  Outlier payments 
are designed to protect hospitals from excessive losses due to unusually 
high-cost cases.  The 292 cost reports had about $664 million in associated 
unreconciled outlier payments.  Because CMS did not reconcile the 
payments, amounts that hospitals owed to Medicare and that Medicare owed 
to hospitals were unknown and outstanding at the conclusion of our 
fieldwork.  Therefore, Medicares contractors could not settle the cost 
reports.  Audits by the Medicare contractors before reconciliation estimated 
that outlier payments were due from hospitals to Medicare for 236 of the 
292 cost reports (about 81 percent) and that outlier payments were due 
from Medicare to hospitals for the other 56 cost reports.   
Overpayments owed to Medicare by hospitals, along with associated interest, 
represent funds that should be returned to the Medicare Trust Fund.  
Delayed processing of underpayments owed to hospitals by Medicare, along 
with associated interest, could affect the hospitals financial viability.   
RecommendationsCMS should ensure that its contractors reconcile outlier 
payments and perform final settlement of the cost reports we reviewed and 
similarly reconcile payments and settle all cost reports submitted after our 
audit period.  CMS should implement an automated system that will 
recalculate outlier claims to facilitate reconciliatCioMnSs  Danidd  Nwootr Rke wcoitnhc iiltes  
cMoendtircaacrteo Orsu ttoli edre Pvealyompe anntds  imn aAicnctoaridna an ccoe mWpitleht Fee, dacecraulr aRteeg luislat toiof ncos satn rde ports 
wGuitihda onuctelier payments requiring reconciliation.  
.  A-07-10-02764.  June 2012.  Full Text.   
  Page 10  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
  Uncollected OverpaymentsObstacles to Collection  
 
Medicare Failed To Recover Identified Overpayments -
 As of October 2010, 
Medicare had not recovered the majority of overpaid amounts OIG identified 
in audit reports during fiscal years (FY) 2007 and 2008 and the first 
6 months of FY 2009.  Collection efforts were obstructed by time constraints 
imposed by the statute of limitations.  Also, Medicare contractors lacked 
adequate guidance for collecting overpayments and CMS did not have an 
effective system for monitoring contractors collection efforts.  We identified 
inaccuracies and could not verify $84.2 million that CMS reported collecting.       
RecommendationsTo reduce future Medicare losses from uncollected 
improper payments, CMS should pursue legislation to extend the statute 
of limitations for collections, ensure that its Audit Tracking and Reporting 
System (ATARS) is accurately updated, ensure that CMS staff record 
collections information consistently in ATARS,; collect sustained amounts 
related to OIG recommendations made after the audit period; vOebrsitfayc tlhesa tt oth e 
C$8ol4le.2c tmioinll ioofn M riellpioonrtse idn  aMse cdoilclaercete Odv herapsa aycmtueanltlys been collected, and provide 
specific guidance to its contractors as specified in our report.  
.  A-04-10-03059.  May 2012.  
FUunllc Toelxlet. c  ted Overpayments Home Health Agencies 
Surety Bond Requirement Remains Unimplemented.
  As of February 29, 2012, 
over 2,000 HHAs still owed CMS a total of approximately $408 million for 
$590 million in overpayments that the agency identified for these HHAs 
between 2007 and 2011.  CMS could have recovered at least $39 million 
between 2007 and 2011 if it had required each HHA to obtain a $50,000 
surety bond.  Of 2,004 HHAs, 21 percent still had overpayment amounts, 
excluding interest, of more than $50,000 each, and more than a quarter of 
these HHAs had outstanding overpayments of greater than $500,000.  In 
January 1998, CMS promulgated a final rule requiring each HHA to obtain a 
surety bond in the amount of $50,000, or 15 percent of the annual amount 
paid to the HHA by Medicare, whichever is greater.  However, this regulation 
remains unimplemented after nearly 15 years.   
The surety bond requirement is an important program integrity tool that 
provides a sentinel effect of keeping fraudulent providers out of the program 
and a means for Medicare to guarantee recoupment of some overpayments.     
RecommendationsCMS should implement the HHA surety bond 
requirement.  To recoup a higher percentage of overpayments mSuardeety t oB onds 
HReHmAasi,n C aMnS U snhuosueldd  Tcooonls Tidoe Prr iontcerceta Msiendgi csaurree tfryo bmo nHdo mame oHuenatlsth a bOovveerp $a5y0m,0e0n0ts 
for those HHAs with high overall Medicare payment amounts.  
.  
OEI-03-12-00070.  September 2012.  Full Text.   
  Page 11  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
  Program Integrity Initiatives and Contractors  
 
 
CMS contracts with several entities, including Program Safeguard 
Contractors, Medicare Drug Integrity Contractors, Recovery Audit 
Contractors, and Zone Program Integrity Contractors (ZPIC), to perform 
many Medicare integrity functions.  It also establishes and oversees special 
program integrity initiatives, such as the Medicare-Medicaid Data Match 
M(Meeddii-cMaerdei-)M preodgricamai dd eDscartibae Md baetlcohw .P  rogram  
Effectiveness of Medi-Medi Program Questioned  
An April 2012 OIG report 
revealed that during 2007 and 2008, Medi-Medi data match program 
produced only limited results and few fraud referrals.  Our report describes 
several limitations in the administration of the Medi-Medi program that may 
have diminished the programs potential.   
The program, which began as a pilot in 2001, is intended to enable Medicare 
and participating State and Federal agencies to collaboratively analyze 
billing trends across Medicare and Medicaid to identify potential fraud, 
waste, and abuse.  During the period of our review, only 10 States had 
chosen to participate.  Two of the States withdrew, finding that the program 
offered them minimal expenditure avoidance and recoupment of Medicaid 
funds.  Of expenditures recouped through the program during 2007 and 
2008, more than three quarters was recouped for Medicare compared to 
Medicaid.              
RecommendationsCMS should reevaluate the goals, structure, and 
Tophee rMateidoincsa roef- tMheed Miceadidi- M(Meeddi ip-Mroegdria) mDa ttoa d Metaetrcmh iPnreo gwrhaamt aspect of the 
program, if any, should be part of CMSs overall program integrity strategy.  
.  OEI-09-08-00370.  
AZoprnile 2 P01ro2.g  rFaumll T Ienxtt.e  grity ContractorsConflicts of Interest  
CMSs Oversight of ZPIC-Related Conflicts of Interest Inadequate  
A July 2012 
report revealed that some ZPIC contract offerors (companies that submit 
proposals for ZPIC contracts) and their subcontractors failed to provide all 
the requisite information regarding financial interests in other entities.  Also, 
descriptions of the conflicts of interest presented were often unclear, and 
some did not distinguish actual conflicts from possible conflicts.  Offerors 
and their subcontractors often had business and contractual relationships 
with CMS and with other offerors, but rarely considered them to be actual 
conflicts.  Offerors, subcontractors, and CMS identified 1,919 business and 
contractual relationships as possible conflicts and 16 as actual conflicts.  
CMS does not have a written policy for reviewing conflict and financial 
interest information.   
  Page 12  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
While the existence of conflicts of interest does not necessarily indicate that 
improper activity is taking place among CMS contractors, the public trust in 
CMS and its contractors could come into question if conflicts are not 
explicitly and openly disclosed as well as properly mitigated.  Conflicts of 
interest could introduce bias, which in turn could influence ZPICs efforts to 
reduce fraud, waste, and abuse in the Medicare program.     
RecommendationsCMS should provide clear guidance to offerors and 
subcontractors regarding which business and contractual relationships 
should be identified as actual versus possible conflicts; require offerors and 
subcontractors to distinguish between actual and possible conflicts; state 
whether they need to report certain data elements; create a standardized 
format for reporting information and requiCroen iftlsic utss ea;n adn Fdi ndaenvecilaolp  a formal, 
Rwerliattteionn pshoilpicsy A omuotlning iPnogt henotwia cl oZnofnliec tP-roofg-irnatmer eInstte ignrfoitrym Caotniotrna cptroorvsided by 
offerors should be reviewed by CMS staff.  
.  
OEI-03-10-00300.  July 2012.  Full Text.   
Medicare Part C  Medicare Advantage 
 
Medicare Part C, called Medicare Advantage (MA), was established to 
offer beneficiaries optional ways to receive benefits.  Organizations that 
participate in the MA program include health maintenance organizations, 
preferred provider organizations, provider-sponsored organizations, and 
private fee-for-service plans.  CMS makes monthly capitated payments to 
MA organizations for beneficiaries enrolled in the organizations health care 
plans.  Payments to MA organizations are risk-adjusted on the basis of the 
hPeaarltt hC stat Rusi sokf  eSaccohr bee nCeaflicciualray.t ions  
Diagnosis-Related Data and Documentation Used in Risk Score Calculations Did 
Not Comply With Federal Requirements 
 Reports issued in May and 
September 2012 revealed that two MA organizations were overpaid in 2007 
under Medicare Part C because the diagnoses and/or supporting 
documentation that they submitted to CMS for use in CMSs risk score 
calculations did not always comply with Federal requirements.  CMS uses 
risk scores to adjust the monthly capitated payments to MA organizations for 
the next payment period.   
The first MA organization did not submit documentation to support the 
diagnosis or the diagnoses were unconfirmed.  As a result, the organization 
received approximately $183,000 in overpayments from CMS.  On the basis 
of our sample results, we estimated that the organization was overpaid 
about $115.4 million for 2007.  The second MA organization did not submit 
documentation to support the diagnoses, the documentation was incomplete 
or missing, or the diagnoses were unconfirmed, causing CMSs risk scores to 
be invalid.  As a result of the unsupported diagnoses, the organization 
  Page 13  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
received about $206,000 in overpayments from CMS.  On the basis of our 
sample results, we estimated that the organization was overpaid 
approximately $18.2 million for 2007.   
The organizations did not have written policies and procedures for 
obtaining, processing, and submitting diagnoses to CMS, and their practices 
were not effective in ensuring that the diagnoses it submitted complied with 
Federal requirements.   
RecommendationsThe MA organizations should refund to the Federal 
Government overpayments identified for sampled beneficiaries (see 
individual reports below) and work with CMS to determine the correct 
contract-level adjustment for the projected overpayments.  Other 
recommendations that apply as indicated in the specific reports include 
implementing written policies and procedures for obtaining, processing, 
and submitting valid risk adjustment data; monitoring the effectiveness of 
the written policies and procedures; and improving practices to ensure 
Risk Adjustment Data Validation of Payments Made to PacifiCare of 
compliance with Federal requirements.   
Texas for Calendar Year 2007 (Contract Number H4590)
Report 1
.  A-06-09-00012.  
Risk Adjustment Data Validation of Payments Made to Paramount 
May 2012.  Full Text.   
Care, Inc., for CY 2007 (Contract No. H3653)
Report 2
.  A-05-09-00044.  September 
2012.  Full Text. 
Medicare Part D (Prescription Drug Benefit) 
 
Medicare beneficiaries generally have the option to enroll in a Part D 
prescription drug plan (PDP) and receive all other Medicare benefits on a 
fee-for-service basis or to enroll in a Part C Medicare Advantage prescription 
drug plan (MA-PD) and receive all of their Medicare benefits, including 
prescription drug coverage, through managed care.  PDPs and MA-PDs are 
rPeaferrtr Ded toR ceotlaleicl tPivhelayr ams a"Pcaierts D   plans." 
Questionable Part D Billing by Retail Pharmacies  
Retail pharmacies each 
billed Part D an average of nearly $1 million for prescriptions in 2009.  Over 
2,600 of the pharmacies had questionable billing, i.e., had extremely high 
billing for at least one of the eight measures that we developed.  For example, 
many pharmacies billed extremely high dollar amounts or numbers of 
prescriptions per beneficiary or per prescriber, which could mean that they 
were billing for drugs that were not medically necessary or were never 
provided to the beneficiary.  Although some of this billing may be legitimate, 
pharmacies that bill for extremely high amounts warrant further scrutiny.  
The Miami, Los Angeles, and Detroit areas were the most likely to have 
pharmacies with questionable billing. 
  Page 14  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
RecommendationsCMS should strengthen the Medicare Drug Integrity 
Contractors monitoring of pharmacies and ability to identify pharmacies 
for further review; provide additional guidance to sponsors on monitoring 
pharmacy billing; require sponsors to refer potential fraud and abuse 
incidents that may warrant further investigation; develop Mriesdki csacorer eRse ftoaril  
pPhhaarrmmaacciieess ;W fuitrhth Qeure ssttrieonngatbhlee nP aitrst  cDo mBipllliinagnce plan audits; and follow up on 
the pharmacies identified as having questionable billing.  
.  OEI-02-09-00600.  May 2012.  
PFualrl tT eDxt.   Schedule II Drugs 
Inappropriate Refills of Schedule II Controlled Substances  
Medicare Part D 
inappropriately paid $25 million for Schedule II drugs billed as refills in 
2009.  Schedule II drugs include narcotics commonly used to relieve pain 
and stimulants.  Sponsors should not have paid for any of these drugs 
because Federal law prohibits the refilling of Schedule II controlled 
substances.  Some of these drugs may have been inaccurately billed.  It is 
possible that some long-term-care pharmacies incorrectly billed these drugs 
as refills when they were partial fills.   
Partial fills occur when a pharmacist does not dispense all doses of the 
prescribed medication at one time.  Several concerns exist, however, if 
partial fills are inaccurately billed as refills.  Moreover, over 25,000 
Schedule II refills had invalid prescribers. Three-quarters of Part D sponsors 
paid for Schedule II drugs billed as refills, indicating that many sponsors do 
not have adequate controls to prevent these refills.  Schedule II drugs have 
the highest potential for abuse of any prescription drugs legally available in 
the United States and cannot be dispensed without a prescription that 
contains the name, address, and signature of the prescriber. 
RecommendationsTo reduce the potential for improper payments, CMS 
should issue guidance to sponsors to prevent billing of Schedule II refills 
and to ensure accurate billing of partial fills; exclude Schedule II refills when 
calculating payments to sponsors; monitor sponsors to ensure that they 
vInaalipdpartoep prriaestec rMibeedri cnaurme Pbaerrts  Dfo Pr aSycmheednutsl efo IrI  dScrhuegdsu; alen IdI  fDorlulogws  Buipll eodn  as Refills
sponsors, pharmacies, and prescribers with high numbers of refills.  
.  
OPaEIr-t0 D2-09D-0u0p60li5c.a  tSeep Pteamymbeer n2t0s1 2fo.  rF uHllo Tsepxitc.  e-Covered Drugs 
Medicare Paying Twice for Prescription Drugs for Hospice Beneficiaries 
 
During calendar year 2009, Medicare Part D paid for prescription analgesic, 
antinausea, laxative, and antianxiety drugs, as well as prescription drugs 
used to treat chronic obstructive pulmonary disease and amyotrophic lateral 
sclerosis, that likely should have been covered under the per diem payments 
made to hospice organizations.  As a result, the Medicare program could be 
paying twice for prescription drugs for hospice beneficiariesonce under 
the Medicare Part A hospice per diem payments and again under Medicare 
  Page 15  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
Part D.  To be eligible for Medicare hospice care, a beneficiary must be 
entitled to Part A of Medicare and be certified as terminally ill (i.e., having a 
medical prognosis that life expectancy is 6 months or less if the disease runs 
its normal course).  Under Medicare Part D, individuals entitled to benefits 
under Part A may obtain voluntary coverage for prescription drugs.  
RecommendationsCMS should educate sponsors, hospices, and 
pharmacies that it is inappropriate for Medicare Part D to pay for drugs 
related to hospice beneficiaries terminal illnesses; perform oversight to 
ensure that Part D is not paying for drugs that Medicare has already covered 
under the per diem payments made to hospice organizations; and require 
sMpeodnicsaorres  Ctoo udledv Beleo Ppa cyoinngtr Towls itchea fto pr rPerveesncrti Mpteiodnic Darreu gPsa frotr D B fernoemfi cpiaayriiensg i nfo r 
dHrousgpsic tehat are already covered under the hospice per diem payments.  
Part D.  AT-0rO6-O10P- 0M00is5c9a.  lJcuunlea 2ti0o1n2s.   Full Text.   
TrOOP Miscalculations Caused Sponsor To Underpay Share of Costs -
 
WellPoint, Inc. (a Part D drug plan sponsor), underpaid its share of drug 
costs because it did not always calculate true out-of-pocket (TrOOP) costs in 
accordance with Federal requirements for CYs 2008 and 2009.  We estimated 
that enrollees and Medicare paid $17.7 million more than the enrollees 
5-percent share in the catastrophic phase because of the sponsors 
miscalculations. 
TrOOP costs are prescription drug costs paid by the enrollee, or by specified 
third parties on their behalf, that count toward the annual out-of-pocket 
threshold that enrollees must meet before their catastrophic drug coverage 
begins.  Once an enrollees incurred costs exceed the annual out-of-pocket 
threshold, the enrollees cost-sharing is the greater of either the copayments 
designated by the enrollees plan or 5 percent of actual cost (which is known 
as coinsurance).  Medicare Part D sponsors are required to track enrollees 
TrOOP costs to properly adjudicate enrollee claims.     
RecommendationsWellPoint should calculate TrOOP costs in accordance 
with Federal requirements, enhance communication with other plans to 
ensure that TrOOP balances are transferred properly, implement system 
edits to ensure that each claim is processed accordiWnge tlloP iotisn pt,l aInnc b., eDnidef Nitos,t  
aAnlwda imysp Claelmcuelnatt es yEsntreomll eeedsit Ts rtuoe e-Onsuut-rOef t-hPaotc kperte Cscorsitpst iino nA cdcrourgd aenvecen tw riethco rds 
Fareed eardajlu Rsteeqdu itroe macecnutrsately update TrOOP balances.  
Part D Formularie.s  A-0D5u-1a1l -E0l0ig0i1b8l.e  M Baeyn 2e0f1i2c.i a Fruiell sT ext.   
Drugs Commonly Used by Dual Eligible Beneficiaries Generally Available Under 
Part D -
 A June 2012 report revealed that with some variation, Part D plan 
formularies generally included 191 of the 200 drugs most commonly used by 
beneficiaries who are eligible for both Medicare and Medicaid (dual 
eligibles).  Nine drugs were excluded from coverage by law.  Formularies are 
  Page 16  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
lists of drugs covered by the plans.  On average, Part D plan formularies 
included 96 percent of the 191 commonly used drugs.  Also, 61 percent of 
the commonly used drugs are included by all Part D plan formularies.  These 
results are largely unchanged from OIGs findings for formularies reported in 
a related 2011 annual report.   
Also, plan formularies increased the number of unique drugs subject to 
utilization management tools from 2011 to 2012.  Such tools include prior 
authorization, quantity limits, and step therapy.  Step therapy is the practice 
of beginning drug therapy for a medical condition with the most cost-
effective or safest drug therapy and progressing if necessary to more costly 
or risky drug therapy.  Most of the increase was due to an increase in the use 
of quantity limits by plan formularies.  This annual review is required 
pursuant to the Affordable Care Act.  This is the second report the OIG has 
Medicare Part D Plans 
produced to meet this mandate.   
Generally Include Drugs Commonly Used by Dual Eligibles:  2012
The report does not contain recommendations.  
.  
OEI-05-12-00060.  June 2012.  Full Text.   
Patient Safety and Quality of Care 
 
As purchasers of health care, Medicare and Medicaid face challenges in 
ensuring quality of care for their beneficiaries.  Despite increased attention 
tNou prastiinengt  Hsaofemtye, psrobIlneamds epqerusaistte.  Resident Assessments and Care 
Plans 
Elderly Residents Receiving Atypical Antipsychotic Drugs At Risk  
A July 2012 
report revealed that nearly all (99 percent) of nursing facility records for 
elderly residents receiving atypical antipsychotic drugs failed to meet one or 
more Federal requirements for resident assessments and/or care plans.  
Nursing facility staff are required to assess each residents functional 
capacity upon admission to the facility and periodically thereafter.  Staff 
must specify in a written care plan made on the basis of the assessments the 
services that each resident needs.   
We found that provider records did not contain evidence of compliance with 
Federal requirements for care plan development.  One-third did not contain 
evidence of compliance regarding resident assessments.  Eighteen percent of 
records did not contain evidence to indicate that planned interventions for 
antipsychotic drug use occurred.     
RecommendationsCMS should improve the detection of noncompliance 
with Federal requirements for resident assessments and care plans for 
residents receiving antipsychotic drugs, take appropriate action to address 
noncompliance, and provide methods for nursing facilities to enhance the 
  Page 17  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
  Nursing Facility Assessments and Care Plans for Residents Receiving Atypical 
dAenvtieplsoypcmhoetnict  aDnrdu gussefulness of resident assessments and care plans.  
Nursing Homes.  ODEisI-a0s7t-e0r8 -P0r0e1p5a1r. e Judlny e2s0s1 2a.n  Fdu lRl Teesxpto.   nse  
More Detailed Guidance Needed for Nursing Homes, Surveyors, and 
Ombudsmen  
We found that from 2007 to 2010, although most nursing 
homes nationwide met Federal requirements for written emergency plans 
and preparedness training, emergency plans lacked about half of the tasks 
on CMSs recommended checklist.  Nursing homes faced challenges with 
unreliable transportation contracts, lack of collaboration with local 
emergency management, and residents who developed health problems.  
Long-term-care ombudsmen were often unable to support nursing home 
residents during disasters; most had no contact with residents until after the 
disasters.  States reported making some efforts to assist nursing homes 
during disasters, related mostly to nursing home compliance issues and 
ad hoc needs.  We identified similar issues in a 2006 review.     
RecommendationsCMS should revise Federal regulations to include 
specific requirements for emergency plans and training, update the State 
Operations Manual to provide detailed guidance for surveyors assessing 
compliance with Federal regulations for nursing home emergency planning 
and training, and promote use of the checklisGtsa ipt si sCsounetdin. u Aeo TAo  sEhxoisutl din  
Ndeuvresilnogp  Hmoomdee lP proelpicaireesd annedss  parnodc eRdeuspreosn sfoe rD luornign-gt eDrimsa-sctaerres :o  m20b0u7d -s 2m0e1n0 to 
protect residents during and after disasters.  
.  
OEI-06-09-00270.  April 2012.  Full Text.  (See also OEI-06-09-00271.  
April 2012.)   
Other CMS-Related Reviews 
 
CMS has many peripheral oversight functions, such as those related to the 
integration of electronic health record systems, management of 
appropriated funds, cost-based contracts, and general contract 
Eadlemcitnriostnraicti oHne.  alth RecordsCoding of Evaluation and 
Management Services 
Physicians Use of Electronic Health Records in Coding Evaluation and 
Management Services 
 This review of physicians use of electronic health 
record (EHR) systems, which responded to a request from the Office of the 
National Coordinator for Health Information Technology, revealed that 
although many electronic health record systems can assist physicians in 
assigning codes for E/M services, most Medicare physicians manually 
assigned E/M codes.  Twenty-two percent first began using EHR systems to 
  Page 18  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
 
 
document E/M services in 2011 (the year that CMS commenced its EHR 
incentive program).  Three of every four physicians with EHR systems used a 
certified EHR system to document E/M services.  Fifty-seven percent of 
Medicare physicians used an EHR system at their primary practice locations 
Use of Electronic Health 
in 2011.   
Record Systems in 2011 Among Medicare Physicians Providing Evaluation and 
TMhainsa rgeepmoretn dt oSeesr vnicoets contain recommendations.  
Contract Administ. r OatEiIo-0n4-1R0-e0t0ir1e8m4. e Junnte P 2la01n2, . T Feurlml Tienxat.t  i on Costs 
Certain Contractor Retirement Plan Costs, Termination Claim Unallowable 
 
Blue Cross Blue Shield of Tennessee (BCBS Tennessee), a Medicare 
contractor, claimed approximately $1 million of unallowable supplemental 
executive retirement plan (SERP) costs for Medicare reimbursement for 
FYs 2005 through 2009.  In addition, BCBS Tennessees entire SERP 
termination claim of $365,000 was unallowable for Medicare 
reimbursement.  BCBS Tennessee administered Medicare Part A operations 
under cost reimbursement contracts with CMS until the contractual 
relationship was terminated effective August 1, 2009.  
RecommendationsBCBS Tennessee should revise its final administrative 
cost proposals for FYs 2005 through 2009 to redBulucee  Citrso cslsa Bimlueed S ShEieRldP  ocfo sts 
Tbeyn $n1e smseilel iOonve arnclda iwmiethdd Sruapwp lietsm teenrtmali nEaxteicount icvlae iRme toirf e$m36en5t,0 P0la0n f oCro SstEsR fPor c osts 
Fasisscoacli aYeteadrs w 2i0th0 5th Teh Mroeudgihc a2r0e0 P9art A contracts.  
.  A-07-12-00391.  September 2012.  
EFunldl T Setxat.g  e Renal Disease Program Networks  
Contractor Claimed Unallowable and Unsupported Costs  
Southern California 
Renal Disease Council, Inc., a nonprofit Medicare contractor, claimed 
unallowable and unsupported costs because it did not have adequate 
controls to account for costs claimed under Federal contracts.  CMS contracts 
with end stage renal disease (ESRD) network organizations to administer 
the ESRD program for each State, territory, and the District of Columbia.  The 
networks are responsible for conducting activities in the areas of quality 
improvement, community information and resources, administration, and 
information management.  The networks work with consumers, ESRD 
facilities, and other providers of ESRD services to refine care delivery 
systems to ensure that ESRD patients get the right care at the right time.   
RecommendationsThe Council should strengthen its controls to account 
for costs claimed under Federal contracts, refund to the Federal Government 
the unallowable costs we identifSioeudt, hweornrk C waliitfhor CnMiaS R teon dael tDeirsmeaisnee  Ctohuen  cil, 
Ianllco.,w Calabiimliteyd o Uf ncaolsltosw tahbalte w aen dse Ut nassuidpep,o arntedd r Ceofustnsd U anndye ar mMoeudincta trhea Cto ins tract 
determined to be unallowable.  
  Page 19  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicare Program Reviews 
  Number HHSM-500-2006-018C.  A-09-11-02044
 
.  May 2012.  Full Text.  (See 
also A-09-10-02045, March 2012, and A-09-11-02005, April 2012.)  
 
  Page 20  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
Selected Acronyms and Abbreviations Used in This Major Section 
Medicaid Program Reviews 
  
CMSCenters for Medicare & Medicaid  Form CMS-64Quarterly Medicaid Statement 
Services  of Expenditures for the Medical Assistance 
FFPFederal financial participation  Program 
FMAPFederal medical assistance percentages   HCBSHome and community-based services 
Medicaid Wasteful Spending 
 
Wasteful spending occurs when Medicaids laws, policies, and methodologies 
fail to ensure that program costs are reasonable and appropriate in the 
health care marketplace and fail to reflect Medicaids role as a high-volume, 
pDreuvdeenlot pinmsuernert/apla Cyeern. tersExcessive Daily Rates    
Reimbursement Rates for Certain State-Operated Developmental Centers Not 
Aligned With Rates for Other Intermediate Care Facilities -
 The Medicaid daily 
rate in New York for 15 selected State-operated Intermediate Care Facilities 
(ICF) for individuals with intellectual and developmental disabilities 
(developmental centers) may not have met the Federal requirement that 
payments be consistent with economy and efficiency.  For State fiscal year 
(SFY) 2009, New York claimed Federal reimbursement for care of 
beneficiaries at the developmental centers of nearly $2.27 billion 
($1.13 billion Federal share).  In contrast, the States actual costs for the 
developmental centers totaled about $578 million.  The developmental 
centers daily rate was more than nine times the average rate for all other 
State-operated and privately operated ICFs in SFY 2009.   
The daily rate for Medicaid beneficiaries to reside in the selected 
developmental centers grew from $195 per day in SFY 1985 to $4,116 per 
day in State FY 2009, which is the equivalent of $1.5 million per year for one 
Medicaid beneficiary.  The growth occurred because the States rate-setting 
methodology significantly inflated the Medicaid daily rate for the 
developmental centers and CMS did not prevent the rate from increasing to 
its current levels.  If the State had used prior year actual costs as the starting 
point in its rate methodology instead of its current method in calculating the 
daily rate, the Federal Government might have saved over $700 million in 
reimbursements in SFY 2009.  
RecommendationsCMS should work with the New York to ensure that 
the States Medicaid daily rate for State-operated developmental centers 
meets the Federal requirement that payment for services be consistent with 
efficiency and economy.  On the basis of this report and previous audits of 
  Page 21  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
payments to public providers in other States, OIG recommendMeedd iinca id Rates 
tfoers tNimewon Yyo rbke fSotraet ea- Ocopnergarteesds iDonevael lcoopmmmenitttael eC tehnatet rpsa Mymaye nBtes E toxc peussbivliec 
providers be limited to the actual cost of providing services.  
.  
RA-e0b2a-1t1e-s010M29e. d Micaay i2d0 M12a.  nFualgl eTedx tC. a Trees timony.    
Some States May Fail To Collect All the Manufacturer Rebates They Are Due.
  
Of the 22 States that paid for prescription drugs through managed care 
organizations (MCO) for the second quarter of 2010 through the second 
quarter of 2011, 10 did not invoice manufacturers and collect the rebates 
they were due.  Failure to collect rebates results in net program costs being 
higher than they should be.  The actions were not taken because, for 
example, States had to complete programming changes to the systems that 
process MCO claims.  The Patient Protection and Affordable Care Act of 2010 
(Affordable Care Act) expanded the Medicaid rebate requirement to include 
drugs paid for through MCOs.  To realize the full savings under the 
expansion, States must collect accurate drug utilization data from MCOs and 
invoice and collect rebate payments from manufacturers.       
Eighteen of the 22 States collected all the data needed to invoice drug 
manufacturers for rebates; 3 collected data from a portion of their MCOs; 
and 1 did not collect any drug utilization data.  Twelve of the 22 States 
invoiced manufacturers and collected rebates.  All but one of the States 
performed some type of data verification check of the utilization data they 
obtained.      
RecommendationCMS should follow up with the 10St Sattaetse' sC othllaetc thiaodn  noof t 
Mcoeldleicctaeidd  Rreebbaatteess  ffoorr  Ddrruuggss  dPiasipde Tnhsreodu tgoh M Meeddiiccaaiidd  MMCaOn abgeende Cfiacriaer ies and 
Otarkgea anciztaiotnio tnos enforce rebate collection if necessary.  
.  OEI-03-11-00480.  September 2012.  Full Text. 
Improper State Claims  
for Federal Reimbursement 
 
The Federal and State Governments jointly fund and administer the 
Medicaid program.  Federal medical assistance percentages (FMAP) are 
used to determine the amount of Federal financial participation (FFP)also 
called matching funds or Federal sharefor State expenditures in Medicaid 
and certain other social services.  States do not always effectively identify 
and reduce erroneous and inappropriate billing by providers and suppliers 
that the States claim to CMS for Federal reimbursement.  Items or services 
reflected on provider billings sometimes are not supported by 
documentation in the providers medical files as required, are not medically 
necessary, or do not meet other Federal and State requirements. 
  Page 22  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  HCBS WaiversRoom-and-Board Costs  
 
Unallowable Room-and-Board Costs Claimed by South Carolina 
 
South Carolina improperly claimed about $4.8 million Federal share of 
unallowable room-and-board costs under a home and community-based 
services (HCBS) intellectual and related disabilities waiver program.  The 
States controls were inadequate to ensure that applicable Federal law and 
State guidance were followed.  The State did not detect errors or 
misstatements on local participating entities cost reports.  Also, the State 
did not prescribe a uniform format for the local entities to follow when 
preparing cost reports.  Rather, each local entity prepared its cost reports in 
its own format, making it difficult to identify when unallowable costs were 
claimed.  
RecommendationsSouth Carolina should refund to the Federal 
Government the improperly claimed $4,832,975 Federal share.  The State 
should remove room-and-board related administrative and general costs 
from future waiver program cost reports, deSvoeultohp C aa uronliifnoar mCl acoimste rde Spoomrtein  g 
pUrnoaclelosws aabnlde  rReoqoumir ea nthda Bt opaarrdt iCciopsatst iUnng deenrt itthiee sI nfotelllolewct tuhael  panrodc Reeslsa, taendd  
sDtirseanbgiltihtieens  Wcoasitv reerport review procedures.  
HCBS Waivers.  NA-o0n4c-1o1m-0p4l0ia12n.t   SPerpotevmidbeerrs 2  012.  Full Text. 
Individual Plans of Care, Documentation, Policies and Procedures Insufficient  
Three reports revealed that claims for Federal reimbursement for Medicaid 
HCBS in New Jersey and New York were unallowable for not meeting certain 
Federal and State requirements.  Policies and procedures for overseeing and 
administering the waiver programs were not adequate to ensure that 
providers claimed reimbursement only for services actually provided and 
maintained all the required documentation to support the services billed 
and to ensure that waiver program services were provided to beneficiaries 
only when rendered pursuant to written plans of care.  For example, at one 
provider, beneficiaries plans of care were not reviewed by a physician every 
60 days as required.    
Report 1 RecommendationsNew Jersey should refund to the Federal 
Government the estimated $60,740,637 in improperly claimed Federal 
reimbursements; ensure that providers bill only for documented, allowable 
CCW program services that are provided only to beneficiaries for whom 
there are completed and approved individual habilitation plManeds;i caanidd  ensure 
Panadym deonctusm foern St etrhvaitc easl lU bnedneerf iNcieawri eJesr asepypsr oSveecdti ofonr 1 s9e1r5vcic Ceos mhamvuen biteye nC are 
Wasaseivsesre.d and certified to need the designated level of care.  
  A-02-10-01029.  April 2012.  Full Text.   
Report 2 RecommendationsNew York should refund to the Federal 
Government an estimated $7,772,807 in improper Federal share and 
strengthen policies and procedures to ensure that providers bill only 
for services actually provided, maintain the required documentation, 
  Page 23  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  New York Claimed 
  Unallowable Costs for Services by NYC Providers Under the States 
Danedve ploropvmidenet sael rDviiscaebsi pliutiressu Wanativ teor w Prroitgteranm plans of care.  
.  A-02-10-01027.  August 2012.  
Full Text.   
Report 3 RecommendationsNew York should refund the improperly paid 
$8,177,970 Federal share and improve its monitorRinegv ioefw t hoef  Sreevleicetwede d 
pMreodviicdaeidr  aHnodm iets H oetahlethr  cSoenrvtricaecst eCdla himoms Me haedael bthy  pJerwovisihd eHros mtoe  eannsdu Hreo spital 
cLoifmecpalriea nCcoem wmituhn iFteyd Seerravli caensd  S Mtaaten hraeqttuainr eLmTHenHtCsP.  
.  A-02-10-01002.  
PAperrisl o2n01a2l .C  Faurlel T Seextr.v   icesNoncompliant Providers  
Inadequate Certifications, Inadequate Documentation, Other Errors Found in 
Provider Claims to States 
 New Mexico, New Jersey, and Missouri improperly 
claimed Federal reimbursement for personal care services claims submitted 
by providers that did not comply with certain Federal and State 
requirements; the claims were therefore ineligible for Federal 
reimbursement.  The deficiencies included inadequate personal care 
attendant qualifications and certifications and various documentation 
deficiencies, including no documentation of supervisory visits, unsupported 
units of service claimed, no documentation of physician authorization, and 
lack of State approval for personal care services provided by certain 
caregivers.  Personal care services may be provided to individuals who are 
not inpatients at a hospital or residents of a nursing facility, an Intermediate 
Care Facility for Individuals with Intellectual Disabilities, or an Institution 
for Mental Diseases.  Examples of personal care services include, but are not 
limited to, meal preparation, shopping, grooming, and bathing. 
Report 1 RecommendationsNew Mexico should refund to the Federal 
Government the estimated $404,817 Federal share paid for unallowable 
Rpeevrsieown aolf c Naerew s Merevxiicceos M aenddi ceanisdu Preer tshoanta pl eCrasroen Saelr cvaicrees s Perrovvicidese dp broyv Cidloevriss  
Hmoaminetcaainre e, vInidcence that they complied with Federal and State requirements.  
.   A-06-09-00117.  June 2012.  Full Text.   
Report 2 RecommendationsNew Mexico should refund to the Federal 
Government the Federal share, estimated at $4,483,492, of the States 
payments for unallowRaebvileew p eorfs Noenwal  Mcaerxeic soe Mrveicdeicsa aidn dP eernssounrael  tChaarte p Seerrsvoicneasl  
cParroev isdeerdv ibcye sH perriotvaigdee Hrso mmae iHnteaailnth ecvairdeence that they comply with Federal and 
State requirements.  
.  A-06-09-00063.  May 2012.  
Full Text. 
Report 3 RecommendationsNew Jersey should refund an esNtiemwa Jteerds ey Did 
N$7o7t 4A,l2w7a4y tso C tlhaeim F eFdeedrearla Gl Moveedrincamide nRte aimndb udrisreemcte tnhte f oprr oPveirdseorn atol  Ceanrseu Sree rtvhiacte s 
all of its offices comply with Federal and State requirements.  
  Page 24  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  Made by Bayada Nurses, Inc., in Accordance With Federal and State 
  Requirements
.  A-02-10-01001.  September 2012.  Full Text.   
Report 4 RecommendationsMissouri should refund an estimated 
$26,953,855 to the Federal Government, implement procedures to ensure 
that it adequately supports the costs claimed for personal care services and 
maintains the supporting documentation, and impMroivsseosu irtsi  Cploaliimcieeds  Faendde ral 
pRreoimcebduurrseems feonrt m foorn Uitnoarlilnogw tahbel ep Peersrsoonnaal lc Caarere s eSrevrviciceess p Crloagimrasm for 
compliance with Federal and State requirements.  
.   
AA-d0u7l-t1 1M-0e3n1t7a1l.   HSeepatletmhb Reer h20a1b2il. i tFautlli oTnext.  M  ultiple Deficiencies 
Guidance, Monitoring Needed To Curb Deficiencies 
 New Jersey improperly 
claimed Federal reimbursement for adult mental health rehabilitation claims 
that were unallowable because community residence rehabilitation (CRR) 
providers failed to comply with Federal and State requirements.  We found 
the following seven types of deficiencies:  provider staff did not meet 
education and training requirements; service plan requirements were not 
met; the providers staffing levels were not consistent with the required level 
of care or the provider claimed a higher level of care than was 
recommended; weekly progress notes were not documented; a registered 
nurse did not conduct a face-to-face visit within the required time period; 
services were not documented, supported, or allowable; and nursing 
assessment requirements were not met. 
RecommendationsNew Jersey should refund to the Federal Government 
an estimated $30,589,719 in improper Federal reimbursements, give CRR 
providers guidance to help ensure that they complRye wviiethw  Mofe Mdiecdaiicda Sidta Ctlea pimlasn  
froerq Auidruelmt Menetnst, aaln Hde iamltphr Roevhea mbiolintiattoiroinn gS eorfv picreosv Midaedres  bcyla Cimoms mtou ennitsyu Rree sidence 
Pcoromvpidliearns cien  wNeitwh  JFeerdseeyral and State requirements.  
Family PlanningP.h  Aa-r0m2-a0c9y-0 a1n02d8 S.  tMearyil i2z0a1t2io.  nF uClll aTiemxts.     
Inadequate Documentation and Controls Render Claims Unallowable 
 
Reviews of North Carolina and Wyoming Medicaid revealed that the States 
did not always claim Medicaid family planning reimbursement for pharmacy 
and sterilization costs in accordance with Federal and State requirements.  
States furnish family planning services and supplies to individuals of 
childbearing age who are eligible under the State Medicaid plan and who 
desire such services and supplies.  The Federal Government is authorized 
to reimburse States for expenditures in family planning services at an FMAP 
of 90 percent (enhanced rate).  Claims lacked supporting documentation, 
and the States controls did not ensure that costs were claimed pursuant to 
Federal and State requirements.  
Report 1 RecommendationsNorth Carolina should refund to the Federal 
Government the pharmacy claim amounts (estimated at $1,383,713) and 
  Page 25  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
sterilization claim amounts (estimated at $3,665) that were improperly 
reimbursed at the enhanced rate for family planning and improve its 
controls to ensure that it claims the enhanced rate only for contraceptive 
drugs that phNyosirctiha nCsa rporleinsacr Iinbceo frorre cfatlmy iClyla pimlaendn Einngh paunrcpedo sFeesd aenradl  to ensure 
tRheaimt sbtuerrsileimzaetniotn F ocor nSsoemnet  Mfoermdicsa airde S ceormvicpeles tTehda itn W acecroe rNdoatn Fcae mwiiltyh P Flaednnerinagl 
regulations.  
.  
A-04-10-01089.  June 2012.  Full Text.   
Report 2 RecommendationsWyoming should refund $1,348,942 in 
improper Federal reimbursements, review costs for inpatient sterilization 
procedures for quarterly reporting periods after our audit period and refund 
any overpayments, and strengthen inteWrnyoaml cionngt Irnoclso rtroe ecntlsyu Crlea itmhaetd c osts for 
MEnehdaicnaciedd  fRaemimilyb uprlasenmnienngt  sfoterr Miliezdaitciaoind  pFraomceildyu Prleasn anrine gc lSatiemrielidz ainti oacnc Coorsdtasnce 
with Federal and State requirements.  
.  
PAa-0r7t- B11 P-0r1e1m00iu).m  AsuguCstl a2i0m12s.  f Fourl lS Tteaxtte.  - Paid Premiums  
Documentation and Eligibility Issues Associated With States Improper 
Part B Premium Payments 
 Nevada did not always comply with Federal 
requirements when claiming Federal reimbursement for Medicare Part B 
program premiums that it paid on behalf of Medicaid beneficiaries.  Federal 
law allows State Medicaid programs to enter into an arrangement with CMS 
known as the buy-in program.  The buy-in program allows a participating 
State Medicaid program to enroll certain dual eligibles (individuals who are 
entitled to both Medicare and some form of Medicaid benefits) in Part B and 
to pay the monthly premiums on their behalf.  The State may then claim the 
monthly premium expenditures for Federal reimbursement.  We identified 
numerous improper State claims for Federal reimbursement and set aside 
additional amounts for resolution involving public welfare additions (i.e., 
individuals added to a States buy-in list on the basis of a Social Security 
Administration notice to CMS that the individuals appear to be eligible for 
Medicaid).  
RecommendationsNevada should refund to the Federal Government 
$194,891 Federal share of unallowable Part B premiums claimed, identify 
any portion of the $878,263 in Part B premiums claimed for public welfare 
additions that was unallowable and refund the Federal share, identify the 
Part B premiums for which the State did not have adequate supporting 
documentation and refund the Federal share, delete ineligible individuals 
from the buy in program and refund the Federal share of the Part B 
premiums claimed, identify ineligible individuals added through the public 
welfare addition procedure and take appropriate corrective action, establish 
proceduresN teov raeddau Icmep trhoep neurlmy bCelari mofe edr rFoendeeroauls R peuimblbicu rwseemlfaernet  afodrd Mitieodnisc,a arne d 
Penasrtu rBe P trheamt iiut mcasn P sauidp pOonr tB tehhea Flfe odfe Mraeld sihcaairde  Bcleaniemfiecdia froier seach Part B 
premium.  
.  A-09-11-02024.  
July 2012.  Full Text.   
  Page 26  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  Medicare Deductibles and CoinsuranceState Plan Rates  
 
Lack of Policies and Procedures Fostered Noncompliance 
 Montana did not 
always claim Medicaid payments for Medicare Part B deductibles and 
coinsurance for services whose payments are limited to State Medicaid plan 
rates in accordance with Federal requirements and the approved State plan.  
Specifically, for 79 of the 100 claims in our sample, Montana did not limit 
payment of Medicare Part B deductibles and coinsurance to State Medicaid 
plan rates as required under the State plan.  Montana did not compare the 
Medicare payment to the State Medicaid plan rate because it did not have 
policies and procedures requiring it to do so. 
RecommendationsMontana should refund to the Federal Government an 
estimated $1,113,789 in unallowable Medicaid payments and develop and 
implement policies and procedures to ensure thMaotn itta cnoam Dpiadr Neso tth Per oMpeedrliyc aPraey  
Mpaeydmiceanret  tPoa trht eB S Dtaetdeu Mcteibdliecsa aidn dp lCaoni nrasuter atnoc dee ftoerr mOuintpea tthieen atl lSoewrvaibceles 
Medicare Part B deductibles and coinsurance.  
.  
AA-d0m7-1in1i-s0t3r1a7ti2v. e J uCnoes 2t0s12.U  Fnualll Tloewxt.a   ble Provider Training Costs  
Training Activities Did Not Qualify as Administrative Costs 
 Pennsylvania 
did not comply with Federal requirements when it claimed Medicaid 
administrative costs for the Pennsylvania Restraint Reduction Initiative 
(Initiative).  The claimed costs were for training nursing home providers and 
not for administering the Medicaid program.  CMS explicitly prohibits 
claiming provider training as Medicaid administrative costs.  Accordingly, 
Pennsylvanias claims for Federal reimbursement of Initiative costs for State 
fiscal years 1996-1997 through 2010-2011 as administrative costs were 
unallowable.  In 1996, Pennsylvania launched the Initiative to train nursing 
home providers to reduce the use of physical restraints in compliance with 
Federal regulations.  The Initiative subsequently introduced provider 
training to address other quality-of-life issues in nursing homes.  
RecommendationsPennsylvania should refund $3,001,536 in Federal 
funds for unallowable administrative costs, refund the FPeednenrsayll vsahnariae  Colfa imed 
Muneadlilcoawida bAldem Ininitiisattriavteiv ceo Cstoss tcsl afoimr Pedro avsid aedrm Tirnaiisntirnagt iUven dceors tIsts a Rfteesrt roauinr ta udit 
Rpeedriuocdt,i oann dIn ditiisactoivnetinue all future claims of such costs.  
.  A-03-11-00209.  July 2012.  Full Text.   
Quarterly Statements and Adjustments 
 
States report Medicaid expenditures to CMS on the Quarterly Medicaid 
Statement of Expenditures for the Medical Assistance Program 
(Form CMS-64).  The report must be submitted to CMS within 30 days after 
the end of each quarter.  This form shows Medicaid expenditures for the 
  Page 27  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
quarter being reported and any prior-period adjustments.  It also accounts 
Afodr jaunsyt omveernptasy mMeandtse, u antd eImrppayrmopenetrs ,R aantde r e  funds received by the State. 
Incorrect Rate Applied to Adjustments 
 Maine did not always use the correct 
FMAP when processing claim adjustments reported on the Form CMS-64.  
The Federal Government reimbursed Maine $166 million Federal share for 
1 million Medicaid claims that the State originally paid and subsequently 
adjusted through the Form CMS-64 for calendar years 2005 through 2009.  
Of that amount, $9,179,777 was incorrect.  Errors occurred when the State 
subsequently processed entirely new claims, including the adjustment 
amounts, as current expenditures at the current FMAP.   
RecommendationsMaine should refund to the Federal Government 
M$9a,1in7e9 D,7i7d 7N iot ti mAlpwraoypse Mrlay kcela Cimoreredc fto Mr Medeicdaicida iCdl acilmaim Ad ajdujsutmstemnetnsts and 
ensure that it processes future adjustments using the correct FMAP.  
.  
AC-a0l1c-u1l2a-t0i0o0n0,1 D.  oJucluy m20e1n2.t a Ftuilol nTe Extr.r  o  rs  
Calculations Improper and Documentation Not Properly Retained 
 
The U.S. Virgin Islands claimed Federal Medicaid reimbursement for 
expenditures that were improperly calculated because employees lacked 
policies and procedures for correctly preparing the Form CMS-64.  The 
amounts claimed were not adequately documented by reported 
expenditures.  Supporting documentation could not be located because 
a record retention policy had not been established.   
RecommendationsThe Virgin Islands should refund to the FedReervaiel w of 
QGouvaertrenrmlye Mnte d$i3c9a3id,3 S1t6a tienm imenptr oofp Eexrplye ncdalictuurlaetse fdo re txhpee Mndeidtuicraels A asnsids teasntcaeb lish 
Pprooligcrieasm a innd t hper oUc.eSd. Vuirregsi nfo Irs lcaonrdrse cfotlry t phree Qpuaarirntegr F Eonrdme dC MSeSp-t6e4m. b er 30, 2009
.  
AA-d0j2u-s1t1m-0e1n00ts4 .f  oArp rEilx 2c0e1s2s.  C Founll tTreaxct.t  o  r Profits  
Federal Share Understated and Required Project Approvals Not Obtained 
 
A review of quarterly statements of expenses that Texas submitted to CMS 
revealed that Texas did not correctly report a Medicaid Management 
Information System (MMIS) contractors profits that were in excess of the 
11 percent allowed by the contract.  The States calculation erroneously 
understated the Federal share of the excess profits.   
Apart from this issue, we found that although the sampled MMIS 
expenditures Texas claimed for Federal reimbursements were allowable and 
claimed at the appropriate reimbursement rates, for two projects in the 
sample, Texas did not obtain required prior approvals from CMS.  Such 
projects include designing, developing, and operating the MMIS.  Federal 
  Page 28  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
regulations require States to seek prior approval from CMS to claim Federal 
reimbursement for MMIS project costs estimated to exceed certain 
thresholds.  We also identified 16 other projects, which were not in the 
sample, that did not have the required approvals.                
RecommendationsTexas should refund $2,634,568 related to the Federal 
share of excess contractor profits, obtain retroactive approval for the 
projects that did not hTeaxvaes t Dheid r Neqout iRreedpo prrti Eorx cFeesds eCroanl tarpapctroorv aPlr ofrfoitms i nC MS, and 
eAnccsourrdea tnhcaet  Wpriitohr  Faepdperroavl aRle igsu olbattaioinnesd on future projects as required by 
Federal regulations.  
.  A-06-10-00062.  August 2012.  
FAudllj uTesxtmt. ents for State Collections of Overpayments  
Collections Understated and Federal Share Miscalculated  
Delaware did 
not comply with Federal requirements to report all Medicaid overpayment 
collections.  State officials said that they believed the overpayments had been 
netted out of reported Medicaid expenditures but did not provide support 
for such adjustments.  The State did not properly report its collections for 
Medicaid overpayments because it did not develop and implement effective 
internal controls to ensure accurate reporting on Form CMS-64.  Also, 
Delaware reported on Form CMS-64 collections for overpayments that it 
identified as recoveries resulting from fraud and abuse investigations but 
calculated a Federal share based on an incorrect FMAP.  Using the correct 
FMAP, the State should have reported a higher Federal share.     
RecommendationsDelaware should include $16,272,518 of unreported 
Medicaid overpayment collections on the next Form CMS-64 and refund 
$10,080,378 to the Federal Government, identify and report any unreported 
Medicaid overpayments collected before and after our audit period, account 
for the incorrectly calculated Federal share for the collections resulting from 
fraud and abuse investigations by refunding $2,391, apply the correct FMAP 
when reporting Medicaid overpayments on Form CMS-64, and develop and 
Dimelpalwemareen Dt iidn tNeront aClo cmonpltyr oWlsi tthh aFte wdeirlla el nRaebqluei rtehme eSntatste T too R ceoprorretc Atllyl  rMeepdoircta aidn d 
Orevfeurnpda ythmee Fnet dCeorlalelc sthioanres of Medicaid overpayments on Form CMS-64.  
Overpayments Not F. u All-y0 3R-1e1p-o00rt2e0d3 .   June 2012.  Full Text.   
Some Overpayments Not Correctly Reported  
For Federal fiscal years 2008 
and 2009, New Jersey did not report Medicaid overpayments totaling 
$2.8 million ($1.4 million Federal share) in accordance with Federal 
requirements.  Federal law requires the State to refund the Federal share of 
Medicaid overpayments at the end of the 60-day period following the date of 
discovery, whether or not the State has recovered the overpayment.  Of the 
180 overpayments we reviewed, 14 were only partially reported or not 
reported on Form CMS-64.  The remaining 166 were reported correctly.  The 
State also did not report all Medicaid provider overpayments within the 
  Page 29  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
60-day time requirement.  The State did not properly report these 
overpayments because it had not developed and implemented policies to 
ensure that overpayments were reported correctly on Form CMS-64. 
RecommendationsNew Jersey should include unreported Medicaid 
overpayments of $2,812,968 on the CMS-64 and refund $1,406,486 to the 
Federal Government and develop and imNpelewm Jeenrste pyo Gliecnieesra tloly e Rnespuorert tehda t 
fMuetudricea Mide Odvicearipda oymveernptasy imn eAncctso radraen rceep Worittehd F oend etrhael  cRoergruelcatt Fioonrsm CMS-64 in 
accordance with Federal requirements.  
.  
FAe-0d2e-1ra0-l 0S1h0a0r9e.   Soefp Cteomllbeecrt 2io0n12s.  I mFupll rToepxte. r  ly Retained  
Federal Share of Medicaid Collections To Be Recalculated in 35 States.
  We 
identified 35 States that improperly retained the Federal share of collections 
(e.g., from overpayments to providers), which reduce States expenditures in 
FFP calculations.  Effective with the quarter ending December 31, 2008, the 
American Recovery and Reinvestment Act of 2009 (Recovery Act) 
temporarily increased the percentage of State Medicaid expenditures paid by 
the Federal Government (i.e., the FMAP).  When CMS calculated the 
additional funding for the first Recovery Act quarter, it did not include States 
collections in that calculation.  As a result, States improperly retained 
increased funding.  CMS retroactively provided additional Federal funds for 
the first Recovery Act quarter by applying the increased percentage to 
expenditures each State had already submitted.  A CMS official stated that 
recalculating the Federal share of collections using the Recovery Act FMAP 
was the States responsibility.      
Recommendations CMS should recoup from 35 States $25,012,996 in 
retained funding; review States Federal share calculations for collections 
reported in subsequent Recovery Act quarters and recoup any overpayments 
related to the Recovery Act FMAPs; and emphasize that States should 
calculate the FederaSlt sahteasr eIn oafp cporlolepcrtiiaotnesly f oRre twahinicehd  tFheedye roarli gFiunnadllsy R reelcaetievde dto  
Mamedoiucnatids  cCaollcleuclatitoends  afto rh itghhee Fri, rfsixt eRde-croevimerby uArcste Qmueanrtt eprercentages using those 
same percentages.  
.  A-06-11-00064.  
JMunaen 2a0g1e2d.   FCuallr Teext.F  e  deral Share of Excess Capitation Payments 
Poor Controls, Commingling of Funds Impact Federal Share Adjustments 
 
Pennsylvania did not develop and implement effective internal controls to 
identify and return to the Federal Government the Federal share of excess 
managed care capitation payments recouped from counties Risk and 
Contingency and Reinvestment funds.  Pennsylvania recouped excess 
capitation payments from 12 of 24 counties we reviewed but did not refund 
the full Federal share in accordance with Federal requirements.  Also, the 
State was unable to identify the amount of State-only funds recouped from 
Philadelphia County because Philadelphia Countys reinvestment account 
  Page 30  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
commingled excess capitation payments for both Federal Medicaid and State 
General Assistance enrollees.    
RecommendationsPennsylvania should refund $7,950,454 Federal share 
of excess capitation payments returned by Philadelphia County and develop 
pPeroncnesdyluvraensi ato D eidn sNuorte  Rthefautn itd  rtehfeu Fnudlsl  tFheed eFreadle Srhaal rseh aorf eR oecf oeuxpceedss E cxacpeistsa tion 
pCaaypmitaetniotsn  rPeacyomupeendts f Froromm t hthee R Misekd aicnadid C Boenhtianvgioernacly H aenadlt RheCihnoviecsetsm Perongt rfaumnds.  
.  
A-03-10-00204.  June 2012.  Full Text.   
Prevent and Detect Medicaid Fraud and Abuse 
 
Medicaid faces multiple challenges in preventing and detecting fraud, 
including identifying questionable patterns of billing, overpayments, and 
high rates of improper payments.  Federal and State Medicaid agencies 
mProongitroarm fra Iundt ethgrroiutygh dAatuad ainta Mlyseisd, iacuadiidts I, natnedg inrivteys tCigoantitornasc. tors 
Status of Previously Identified Audit Targets 
 In an April 2012 report, we 
supplemented information in a February 2012 report in which we identified 
concerns with the quality of claims analyses by Review Medicaid Integrity 
Contractors (Review MIC).  (OEI-05-10-00200.)  Two types of CMS 
contractorsReview MICs and Audit MICsare tasked with identifying 
Medicaid overpayments.  Review MICs analyze State Medicaid claims data, 
identify potential overpayments, and refer their analyses to CMS.  After CMS 
evaluates them, CMS selects certain providers as audit targets and assigns 
them to Audit MICs who conduct provider audits and identify actual 
overpayments.   
Our April 2012 addendum report provides information and insights on 
161 of 244 audit targets that CMS had assigned to Audit MICs.  We found that 
as of February 1, 2012, Audit MICs had completed 127 of the 161 assigned 
audits of providers.  An average of 10 months elapsed between the dates 
CMS assigned the audits to Audit MICs and the dates the Audit MICs reported 
their findings to CMS.  Twenty-five of the completed audits identified 
overpayments.  The remaining 102 completed audits found no 
overpayments.  Thirty-four of the assigned audits had not been completed 
Status of 244 Provider Audits 
and were ongoing.   
Identified Using Review Medicaid Integrity Contractor Analysis
The report does not contain recommendations.  
.  
OEI-05-10-00201.  April 2012.  Full Text.   
  Page 31  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  Program IntegrityExcluded Individuals in Managed Care  
 
Few Excluded Individuals Found in Medicaid Managed Care 
 Of 248,869 
individuals listed on employee rosters we requested from sampled 
providers, we identified 16 individuals who were excluded from 
participation in Federal health care programs.  Exclusions are typically 
imposed on the basis of convictions for program-related fraud, patient 
abuse, or license revocations.  The 16 individuals were found among the 
employees of 14 sampled providers.  Incorrect names and failure of 
contractors to follow procedures contributed to the employment of the 
excluded individuals.   
Most providers reported using a variety of safeguards to ensure that they do 
not employ excluded individuals, but identified costs and resource burdens 
as challenges in executing those safeguards.  Seven percent of providers in 
the 12 selected Medicaid managed care entities (MCE) do not check the 
exclusions status of their employees; most of these providers lacked 
Excluded Individuals 
knowledge regarding exclusions.   
Employed by Providers Enrolled in Medicaid Managed Care Entities
The report does not contain recommendations.  
.  
OPEroI-g0r7a-0m9 -I0n0t6e3g2r. i tSyepteSmtabteer  2M01e2d. i cFauildl T Fexrat. ud Control Units 
OIG oversees the operation and performance of all Medicaid Fraud Control 
Units (MFCU or Unit).  As part of this oversight, OIG conducts periodic onsite 
reviews of all Units.  The reviews assess the Units performance in 
accordance with the 12 MFCU performance standards, monitor Unit 
compliance with Federal grant requirements, and highlight noteworthy 
practices.  For the three State reviews completed in this semiannual period, 
OIG found no evidence of significant noncompliance with applicable laws, 
New York MFCU 
regulations, or policy transmittals.   
 From fiscal years 2008 to 2010, the New York MFCU filed 
criminal charges against more than 400 defendants, obtained more than 400 
convictions, and was awarded more than $750 million in recoveries.  Our 
review found a number of noteworthy practices, including the Units 
approach to patient abuse and neglect cases, its list of ongoing investigations 
(created to avoid conflicts among investigating agencies), and its use of 
tMeecdhincoaliodg Ny.e  wO uYro rrke pSotartt ei nMceluddiceasi dfi nFdrainugds C aonndt rroelc Uonmitm:  e2n0d1a1t iOonnssi twe iRthev rieeswpect 
to staff size, training, file maintenance, and policies and procedures. 
.  
Missouri MFCU 
OEI-02-11-00440.  June 2012.  Full Text.   
 For FYs 2008 through 2010, the Missouri Unit reported 
recoveries of $135 million, 13 convictions, and 36 civil settlements.  The Unit 
exercised proper fiscal controls over its resources.  The Unit expanded its 
definition of referrals and changed its process for closing older cMaseedsi cdauirdi ng 
FYs 2008 through 2010.  The report includes findings and recommendations 
with respect to training, documentation, and records oversight.  
  Page 32  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  Missouri State Medicaid Fraud Control Unit:  2011 Onsite Review
 
.  
Kansas MFCU  
OEI-07-11-00750.  July 2012.  Full Text. 
For FYs 2009 through 2011, the Unit reported combined civil 
and criminal recoveries of nearly $66 million and 44 convictions.  The Unit 
increased referrals through education and outreacKha nefsfaosr Stst.a  tOeu Mr erdeipcoaridt  
Finrcaluudd eCso nfitnrdoiln Ugnsi ta:n  2d0 r1e2co Omnmsiteen Rdeavtiieowns with respect to internal controls, 
reporting, training, documentation, and reviews.  
.  OEI-07-12-00200.  September 2012.  
Full Text.   
Medicaid Beneficiary Safety  
and Quality of Care 
Quality of Care for Waiver Program Beneficiaries    
Additional Federal Guidance, Onsite Reviews, Other Oversight Measures 
Needed 
 Of 25 States we reviewed, 7 States did not have adequate systems 
to ensure the quality of care provided to beneficiaries of the States HCBS 
waiver programs.  Although CMS renewed the waiver programs in all seven 
of these States, three did not adequately correct identified problems.  Not 
only did the States fail to correct the problems before renewal of their 
programs, but also they had not adequately addressed the problems long 
after renewal.   
Also, CMS did not consistently use the few tools it has to ensure that States 
correct problems related to quality of care.  States must operate their HCBS 
waiver programs in accordance with certain "assurances," including three 
assurances related to quality of care.  To meet these assurances, States must 
demonstrate that they have systems to effectively monitor the adequacy of 
service plans, the qualifications of providers, and the health and welfare of 
beneficiaries. 
RecommendationsCMS should provide additional guidance to States for 
meeting the required assurances, require States that do not meet one or 
more assurances to develop corrective action plans, require at least one 
onsite visit before a waiver program is renewed and develop detailed 
protocols for such visits, develop a broader array of apprOovaecrhseigsh tto o efn Qsuuarlei ty 
coof mCaprleia innc Me ewdiitcha ieda Hcho mofe t-h aen ads Csuomramncuensi,t ayn-Bda mseadk See irnvfiocrems Wataioivne ra bPorougt rSatmatse 
compliance with the assurances available to the public.  
.  
OEI-02-08-00170.  June 2012.  Full Text.   
  Page 33  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
  Childrens Health Insurance Program 
 
 
The Childrens Health Insurance Program (CHIP) allows States to provide 
health care coverage to uninsured children in families whose incomes are 
too high to qualify for Medicaid but too low to afford private health care 
coverage.  Federal medical assistance percentages (FMAP) are used to 
determine the amount of Federal financial participation (FFP) (i.e., matching 
funds or Federal share) for State expenditures in Medicaid and certain other 
CsoHciIaPl serCvoicnecs,u srurcehn ats  ECnHrIoP.l  l ments  
Alabama Improperly Claimed FFP for Concurrently Enrolled Individuals 
Alabama improperly claimed CHIP FFP for individuals who had Medicaid or 
other health insurance coverage from October 1, 2009, through September 
30, 2010.  States may not claim CHIP FFP for individuals who are 
concurrently enrolled in CHIP and Medicaid or who have other health 
insurance coverage.  Alabamas internal controls were not adequate to 
prevent or promptly correct concurrent enrollments.  The errors occurred 
because State policy allowed for a coordination of benefits between CHIP 
and other health insurance coverage. 
RecommendationsWe recommend that Alabama refund $1.5 million for 
FFP claimed on behalf of individuals who were concurrently enrolled in CHIP 
and Medicaid, refund $153,000 (Federal share) for FFP claimed on behalf of 
individuals enrolled in CHIP who had other health insurance coverage, 
develop additional policies and procedures to prevent or promptly recoup 
CHIP payments made on behalf of individuals who are identified as enrolled 
Acolanbcaumrrae nImtlyp rinop Mereldy iCcalaidim, aendd F reedveirsael  tFhuen cdus rfroern Cth pioldlirceyn tsh Hate aalltlohw Inss fuorra an ce 
Pcoroogrdrainma tEionnro ollfe bees nWefhiots H baedtw Meeedni cCaHidI Po ra nOdth oetrh Here ahlethal Itnhs iunrsaunrcaen Cceo vceorvaegreage.  
.  
AC-H0I4P-11-I0n8a0d0e8q.  uSeapttee mCobesrt  2T0r1a2c.k  Finugll, T Rexetc. onciliation Errors 
Improvements Address Past Deficiencies 
 Not all of the State Childrens 
Health Insurance Program (SCHIP) expenditures that Colorado claimed for 
Federal reimbursement during FYs 1998 through 2006 were allowable 
pursuant to Federal requirements.  However, for FY 2007, Colorado correctly 
claimed SCHIP expenditures.  The overpayments in prior years occurred 
because the State did not adequately track unclaimed costs, fully correct a 
premium collection error, or adequately reconcile quarterly Federal 
reimbursements to its submitted quarterly reports.  The State implemented 
internal control improvements that would, going forward, correct the 
deficiencies.  SCHIP was renamed the Childrens Health Insurance Program 
in 2009, after our audit period.   
  Page 34  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
  Not All of Colorados 
RCleaciommedm Setnadtea tCiohnildreCnolso Hraedaolt hsh Ionusuldra rnecfue nPdro tghrea imnc Eoxrpreecntdlyit uclraeism Weedr e 
A$2ll,o8w3a7b,8le60 Federal share of SCHIP expenditures.  
.  A-07-12-02780.  July 2012.  Full Text.   
  
   
  Page 35  HHS Office of Inspector General 
Semiannual Report to Congress  Fall 2012  Medicaid Program Reviews 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  https://oig.hhs.gov 
 
 
 
  Page 36  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
Legal and Investigative Activities  
Selected acronyms and abbreviations used in this major section: 
Related to Medicare and Medicaid 
  
CIA  corporate integrity agreement  EMTALA  Emergency Medical Treatment and 
CMP  civil monetary penalty    Labor Act of 1986 
CMPL  Civil Monetary Penalties Law  FCA  False Claims Act Amendments 
CMS  Centers for Medicare & Medicaid  HEAT  Health Care Fraud Prevention and 
  Services     Enforcement Action Team 
Investigative Outcomes 
 
For this semiannual period, we reported 687 criminal and 360 civil actions 
against individuals or entities that engaged in health-care-related offenses.  
We also reported $4.3 billion in investigative receivables due the U.S. 
Department of Health and Human Services (HHS) and $1.7 billion 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 Office of Inspector Generals (OIG) investigations often involve the 
combined efforts and resources of our office and other Federal and State law 
enforcement agencies.  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, in appropriate cases, under the False 
Claims Act Amendments of 1986 (FCA), as further amended in 2009.   
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, penalties, forfeitures, assessments, and 
exclusion of individuals or entitiSeesm frioamnn puaarl tRiceippoartti otno  Cino nagllr Feessderal health 
care programs.  Frequently used exclusion and penalty authorities are 
described in Appendix D of this   and on our 
Web site at:  https://www.oig.hhs.gov/fraud/enforcement/cmp/index.asp. 
 
   
  Page 37  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
The following charts show the investigative outcomes that OIG reported for 
all HHS programs over a 5-year period.    
Chart 1- Actions:  All HHS Programs 
 
 
Chart 2  Receivables:  All HHS Programs   
(Includes non-HHS receivables, e.g., States share of Medicaid restitution.) 
 
  Page 38  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  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 the Department of Justice (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.  
From April 1 through September 30, 2012, we received 35 requests for 
advisory opinions.  We issued 11 opinions and 1 modification of an earlier 
opinion.   
Health Care Fraud Prevention and Enforcement 
Action Team Activities 
 
On May 20, 2009, HHS Secretary Kathleen Sebelius and Attorney General 
Eric Holder 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, as well as investing in new resources 
aHnEdA tTec Phrnoovloigdieesr  tCoo pmrevpelniat nacned  cTormaibnaitn fgra  ud, waste, and abuse.  
OIG provides free training on our Web site for health care providers, 
compliance professionals, and attorneys.  OIGs Provider Compliance 
Training was an outreach 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.  The following are links to OIGs provider 
compliance training resources:  
https://oig.hhs.gov/newsroom/video/2011/heat_modules.asp 
https://oig.hhs.gov/newsroom/video/2011/heat_modules.asp#modules 
https://oig.hhs.gov/compliance/provider-compliance-
training/index.asp#materials 
  Page 39  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  Medicare Fraud Strike Force Activities  
 
The Medicare Fraud Strike Force (Strike Force) is a key component of HEAT.  
The Strike Force was established in March 2007 and is operating in nine 
citiesMiami, Florida; Los Angeles, California; Detroit, Michigan; Houston, 
Texas; Brooklyn, New York; Baton Rouge, Louisiana; Tampa, Florida; Chicago, 
Illinois; and Dallas, Texas.  Strike Force teams coordinate joint law 
enforcement operations conducted by Federal, State, and local law 
enforcement entities.  These teams have a proven record of success in 
analyzing data to quickly identify fraud and bring prosecutions.  During this 
reporting period, Strike Force efforts resulted in the filing of charges against 
204 individuals or entities, 85 convictions, and $100.1 million in 
Health Care Fraud Takedown With Highest False Medicare Billings in Strike 
investigative receivables. 
Force History 
In May 2012, Medicare Fraud Strike Force teams in 7 cities executed a 
nationwide operation that resulted in charges against 107 individuals, 
including doctors, nurses, and other medical professionals, for their alleged 
participation in Medicare fraud schemes involving approximately $452 
million in false billing.  The coordinated operation involved the highest 
amount of false Medicare billings in a single takedown in Strike Force 
history.  As part of the operation, HHS also suspended or took other 
administrative actions against 52 providers following a data-driven analysis 
Additional Examples of Strike Force Efforts 
and credible allegations of fraud.  
Texas 
 Princewill Njoku, Ezinne Ubani, and Clifford Ubani were each 
sentenced in a Medicare fraud scheme.  According to court records, 
Princewill Njoku, Ezinne Ubani, and Clifford Ubani were joint-owners of 
Family Healthcare Group, Inc., d/b/a Family Healthcare Services (FHS), a 
home health care provider.  Between April 2006 and August 2009, FHS 
submitted fraudulent claims to Medicare for services that were medically 
unnecessary or were not provided.  The scheme involved other co-
conspirators receiving kickbacks to recruit Medicare beneficiaries to receive 
skilled nursing services from FHS.  Njoku and other co-conspirators created 
false patient files to make it appear that Medicare patients were qualified for 
and received the services.   
During this reporting period, Njoku was sentenced to 9 years of 
incarceration and ordered to pay $5.1 million in restitution, jointly and 
severally; Clifford Ubani was sentenced to 9 years of incarceration and 
ordered to pay $4.2 million in restitution, jointly and severally; and Ezinne 
Ubani was sentenced to 8 years and 1 month of incarceration and ordered to 
pay $2.5 million in restitution, jointly and severally.  Clifford and Ezinne 
Ubani were each excluded from participation in Medicare, Medicaid, and 
Federal health care programs by OIG for 30 years.  To date, nine individuals 
have been sentenced in connection with this scheme.  
  Page 40  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  Florida 
 
 Jose Abel Rodriguez was sentenced to 5 years and 10 months of 
incarceration and ordered to pay over $4.3 million in restitution, jointly and 
severally, after pleading guilty to conspiracy to commit health care fraud.  On 
the basis of the conviction, Rodriguez was also excluded from participation 
in the Medicare, Medicaid, and other Federal health care programs for 
25 years.  According to court documents, Rodriguez conspired with Isaac 
Castro, who owned DME companies Alju Medical Equipment, Inc.; PMCME, 
Inc.; JVZ Medical Equipment, Inc.; and Premier Quality Equipment Rentals, 
Inc.  Among other things, Rodriguez recruited nominee owners for Castros 
companies.  Between October 2005 and June 2010, Rodriguez, Castro, and 
their co-conspirators used the DME companies to submit false and 
fraudulent claims to Medicare for items and services that were not 
prescribed by doctors or provided, as claimed.  The co-conspirators diverted 
proceeds from the fraudulent claims for their own personal use and benefit.   
Castro was previously sentenced to 1 year and 11 months of incarceration 
and ordered to pay over $1.6 million in restitution, as well as being excluded 
by OIG for a period of 10 years on the basis of the conviction.  Additionally, 
co-conspirators Oscar Hernandez and Ricardo Manchuat Gil were 
respectively sentenced to 4 years and 9 months and 3 years and 1 month of 
incarceration for their roles in the scheme.  Hernandez was also ordered to 
pay $316,749 in restitution, jointly and severally, and Gil was ordered to pay 
Michigan 
$644,911 in restitution.  Hernandez was excluded by OIG for 15 years. 
 
 Tariq Mahmud, owner of Comprehensive Rehabilitation Services, 
Inc.(CRS), was sentenced to 7 years of incarceration and ordered to pay $1.8 
million in restitution, jointly and severally, in a health care fraud scheme.  
According to court documents, between January 2003 and February 2007, 
Mahmud purchased falsified physical and occupational therapy files from 
other therapy and rehabilitation companies and used them to fraudulently 
bill Medicare.  Mahmud also paid kickbacks and gave prescription drugs to 
Medicare beneficiaries in exchange for their signatures on forms, as well as 
the use of their Medicare beneficiary numbers.  Additionally, Mahmud and 
his co-conspirators signed false physical therapy notes claiming that therapy 
services were provided, resulting in the submission of false claims to 
Medicare for services never rendered.  Mahmud was excluded by OIG for 25 
years.  Several of Mahmuds co-conspirators were previously sentenced for 
their roles in the scheme. 
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.  OIG attorneys are detailed full time to DOJs 
Criminal Division, Fraud Section, for temporary assignments, such as 
  Page 41  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
assignments to the Medicare 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 
medical equipment and supplies, infusion therapy, physical therapy, and 
oMthoesrt t yWpeasn otfe Mde Fduicgairtei vaends  MLiesdteicdai do nfr aOuIdG. s Website 
The OIG Most Wanted Fugitives Web site continues to garner national and 
international attention and greatly assists in helping to capture fugitives 
charged with defrauding Federal health care programs and stealing millions 
of taxpayer dollars.  The Most Wanted Fugitives Web site is periodically 
updated and features a profile and statistics 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.   
In addition, the Web site features recently captured fugitives, including 
Atalier Moncho Avila, who was apprehended during this reporting period.  
Avila was indicted in March 2009 on charges of health care fraud; he 
allegedly billed Medicare for more than $1.5 million for the cost of medical 
equipment and supplies and services that were not prescribed by doctors or 
provided, as claimed.  Avila was arrested on July 28, 2012, at Miami 
International Airport after arriving from Havana, Cuba.  He is in custody and 
aMwoaisttin Wg aa cnotuerdt  aDpepeaadrbanecaet.   Parents 
Because of the success of OIGs Most Wanted Fugitives Web site, OIG recently 
launched its Most Wanted Deadbeat Parents Web site at: 
https://oig.hhs.gov/fraud/child-support-enforcement/index.asp.   
The site highlights parents who fail to pay court-ordered child support for 
the care of their children and put an unnecessary strain on the custodial 
parent and the children, as well as on agencies tasked with enforcing these 
matters.  The Web site lists deadbeat parents and is updated frequently.  The 
site includes information on OIGs role in pursuing parents who fail to pay 
court-ordered child support, and it has a reporting button to turn in 
deadbeat parents.  At the top of the Most Wanted Deadbeat Parents list is 
Robert Sand, who owes more than $1 million in child support payments for 
his three children.  Sand has made several attempts to elude his child 
support obligations, including u nderreporting his income and moving from 
New York to Florida and then to Thailand.  
 
  Page 42  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  Recently Completed Cases and Settlements 
 
 
Investigative work often requires more than a year to yield results.  As a 
consequence, many of the cases summarized in this section reflect the 
results of our Medicare- and Medicaid-related work over several years that 
culminated in the second half of fiscal year (FY) 2012. 
The following represent various types of cases concluded during this 
semiannual period.  Summaries are organized by the sector of the health 
cMareed inicdauls Etrqyu inipvomlveedn to ra bnyd t hSeu npaptulirees o f the offense. 
Georgia 
 As part of an organized crime ring takedown, Arthur Manasarian 
and Sahak Tumanyan were sentenced in a Medicare fraud scheme.  
Manasarian opened a durable medical equipment company, Brunswick 
Medical Supply (BMS), in Brunswick, Georgia.  According to court 
documents, once BMS was operational, Manasarian stole the identities of 
hundreds of Medicare beneficiaries and physicians from multiple States and 
submitted claims to Medicare for medical equipment that was never 
provided.  In addition, Tumanyan engaged in numerous fraudulent financial 
transactions designed to deliberately conceal the proceeds from the 
fraudulent Medicare claims.  
Manasarian was sentenced to 12 years of incarceration and ordered to pay 
over $1.8 million in restitution, jointly and severally, for conspiracy to 
commit health care fraud and aggravated identity theft.  Tumanyan was 
sentenced to 5 years of incarceration and ordered to pay $308,963 in 
restitution, jointly and severally, on charges of money laundering conspiracy.  
Tumanyan, an Armenian national, will be deported after his incarceration.  
Additionally, Manasarian and Tumanyan were each excluded by OIG for 20 
years and 15 years, respectively.  This case was jointly investigated with U.S. 
Immigration and Customs Enforcement, the Federal Bureau of Investigation 
(FBI), and the Los Angeles County Sheriffs Office.  The investigation of this 
Tennessee 
scheme has led to more than 35 arrests.  
 AmMed Direct, LLC (AmMed), agreed to pay $18 million to 
resolve allegations that it violated the False Claims Act.  From September 
2008 to January 2010, AmMed, a supplier of diabetic testing supplies and 
other DME, allegedly billed Medicare and Tennessee Medicaid for diabetic 
testing supplies sold to beneficiaries through telephonic cold calls, in 
violation of the Social Security Act, 1834(a)(17), which prohibits unsolicited 
telephone contact by suppliers.  AmMed advertised and offered free 
cookbooks without any mention of diabetic testing supplies or without 
stating that AmMed was a DME supplier.  When beneficiaries called to claim 
the cookbook, AmMed allegedly sold them diabetic testing supplies and 
submitted claims to Medicare and Tennessee Medicaid.  The settlement also 
resolves AmMeds failure to refund Medicare and Medicaid for supplies that 
  Page 43  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
were returned to the company.  AmMed disclosed the unpaid refunds to the 
California  
Government during the investigation.  
Camillus Ehigie, co-owner of two Los Angeles-area health care 
companies, was sentenced to 3 years and 6 months of incarceration and 
ordered to pay $7 million in restitution, jointly and severally, for his 
conviction stemming from a 9-year Medicare fraud scheme.  Ehigie and co-
defendant Evans Oniha were the founders and operators of Prosperity Home 
Health Services, Inc. (Prosperity), a home health agency, and Caravan 
Medical Supplies, Inc. (Caravan), a durable medical equipment company.  
According to court documents, between October 2002 and February 2011, 
Ehigie, Oniha, and their co-conspirators paid individuals, referred to as 
marketers, for Medicare beneficiary information and doctors prescriptions 
that were acquired fraudulently by the marketers.  This information was 
then used by Prosperity and Caravan to submit false claims to Medicare for 
services that were not medically necessary or were not provided.  Oniha was 
previously sentenced to 8 years of incarceration and ordered to pay $7 
million in restitution, jointly and severally.  Oniha was also excluded by OIG 
Rhode Island  
for 30 years. 
Sonja Ascoli was sentenced to 3 years probation and ordered 
to pay $70,358 in restitution, jointly and severally, after pleading guilty to 
health care fraud.  According to court records, Ascoli worked as a sales 
representative for Planned Eldercare, Inc., a nationwide supplier of durable 
medical equipment.  To induce beneficiaries to attend her sales 
presentations, Ascoli advertised no cost custom fit shoes for diabetics and 
medical equipment for individuals suffering from arthritis.  Ascoli obtained 
beneficiaries Medicare and physician information and then suggested 
products that could help with their ailments.  Ascoli then ordered as many 
DME products as possible for those beneficiaries without regard to whether 
they requested the products or had a medical need for the equipment.  When 
beneficiaries complained about receiving items that they did not order, 
Ascoli allegedly told them to keep the products in the closet until they need 
them.  Gary Winner, president of Planned Eldercare, was previously 
sentenced to 3 years and 1 month of incarceration and ordered to pay more 
than $2.2 million in restitution after pleading guilty to health care fraud, 
money laundering, and introduction of an adulterated and misbranded 
mPheadircmal adceeviuceti icnatlo  Cinotemrsptaatnei ceosm  merce.   
Massachusetts 
 In the largest health care fraud settlement in U.S. history, 
GlaxoSmithKline (GSK) entered into a global criminal, civil, and 
administrative settlement and agreed to pay $3 billion to resolve its liability 
for its marketing and promotion practices associated with several drugs.  In 
three False Claims Act settlement agreements, the United States alleged that 
GSK promoted several drugs, including Paxil, Wellbutrin, Advair, Lamictal, 
and Zofran, for off-label uses and paid kickbacks to induce the prescription 
of certain drugs; improperly promoted the drugs Avandia, Advandmet, and 
Avandaryl with false and misleading statements about the drugs safety; and 
  Page 44  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
violated the requirements of the Medicaid drug rebate program.  As part of 
the settlement, GSK also entered into a 5-year corporate integrity agreement 
(CIA) with OIG that includes enhanced compliance provisions designed to 
promote accountability and transparency in GSKs business practices.  In 
addition, the CIA requires that GSK maintain its Patient First program, 
which is designed to compensate sales representatives on the basis of the 
quality of services they provide to physicians instead of the volume of sales 
in their territories.  In addition, GSK must establish and maintain a financial 
recoupment program for executives.   
The investigation involved collaboration across several Government 
agencies, including the Food and Drug Administration (FDA), FBI, Defense 
Criminal Investigative Service, Office of Personnel Management, Department 
of Veterans Affairs, Department of Labor, TRICARE, and the Postal Service.  
In addition, GSK entered into separate Medicaid-related settlement 
Massachusetts      
agreements with multiple States.   
Pharmaceutical manufacturerMerck, Sharp & Dohme
(Merck) agreed to pay over $628 million to resolve allegations that it 
violated the FCA by improperly marketing and promoting the drug Vioxx.  
Between May 1999 and September 2004, Merck allegedly promoted Vioxx 
improperly for the treatment of rheumatoid arthritis; made statements 
about the cardiovascular safety of Vioxx that were inaccurate, misleading, 
and inconsistent with the FDA-approved labeling for the drug; and made 
false statements about the safety of Vioxx to State Medicaid agencies.  The 
settlement agreement is part of a global criminal, civil, and administrative 
settlement under which Merck paid a total of $950 million plus interest; pled 
guilty to a misdemeanor violation of the Food, Drug, and Cosmetic Act; and 
entered into a comprehensive 5-year CIA with OIG.  In addition, Merck is 
expected to enter into separate Medicaid-related settlement agreements 
New Jersey  
with 44 States.  
McKesson Corporation agreed to pay $187 million plus interest 
to resolve allegations that it inflated pricing information for its prescription 
drugs.  McKesson is a wholesaler of pharmaceutical products.  The United 
States alleged that McKesson provided inflated average wholesale pricing 
figuresup to 25-percent markupsto First Data Bank, a publisher of 
discount pricing.  First Data Banks information was then used by State 
Medicaid programs for determining reimbursements and fee schedules for 
McKessons prescription drugs.  As a result of McKessons alleged provision 
of artificially inflated wholesale pricing, State Medicaid programs 
reimbursed higher amounts for prescription medications than should have 
been paid between August 2001 and December 2009.  In addition, McKesson 
agreed to pay over $151 million to 29 States and the District of Columbia to 
resolve its liability to the States affected by the alleged price manipulation 
Michigan  
scheme. 
Walgreens agreed to pay $7.9 million to resolve its liability under 
the False Claims Act.  The United States alleged that Walgreens offered and 
provided improper inducements in the forms of gift cards, gift checks, and 
  Page 45  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
similar promotions to beneficiaries of Government health care programs to 
iQnduuacleit tyh eo fb eCnaerfiec iaries to transfer their prescriptions to Walgreens.   
Georgia -
 Former nursing home operator George Houser was sentenced to 
20 years of incarceration and ordered to pay $6.7 million in restitution after 
being convicted of conspiracy to commit health care fraud.  Houser 
submitted claims to the Medicare and Georgia Medicaid programs for 
services provided to residents that were so deficient that the judge 
determined them to be worthless.  During the trial, witnesses testified that 
there were food shortages, leaking roofs, virtually no nursing or 
housekeeping supplies, poor sanitary conditions, major staff shortages, and 
serious safety concerns at the three nursing homes in Georgia that Houser 
and his wife owned and operated from 2003 to 2007.  Evidence included 
testimony from employees, whose paychecks regularly bounced, who also 
purportedly incurred substantial personal debt buying food and beverages 
to keep the residents from starving.   
The court found that Houser was aware of the conditions at the nursing 
homes, but rather than make a good faith effort to remedy the situation, he 
chose instead to divert significant nursing home funds toward his real estate 
development ventures and for other personal expenses.  The court 
concluded that the conditions at the nursing homes were so poor that, in 
essence, any services that Houser actually provided were of no value to the 
residents.  This is the first time that a defendant has been convicted after a 
trial in Federal court for submitting claims for payment for worthless 
sLearbvoicreas.to  ries  
Indiana 
 Physician Adolph Yaniz and Medway Diagnostic Laboratories 
operator Munir Chaudhry were each sentenced after health care fraud 
convictions.  The Government contended that, between January 2008 and 
February 2009, Chaudhry worked with Yaniz to perform unnecessary blood 
tests on Yanizs patients and then billed Medicare and Medicaid for the 
services.  Chaudhry also allegedly paid the monthly rent for Chaudhrys 
medical practice in exchange for Yaniz's sending all his patients specimens 
to Medway Diagnostic Laboratories for analysis.  In addition, Yaniz admitted 
that he knowingly dispensed hydrocodone and alprazolam to patients who 
had no medical need for the medications.  Yaniz was sentenced to 5 years of 
incarceration and ordered to pay restitution of $71,577.  As part of his plea 
agreement, Yaniz agreed to forfeit his medical license.  He further agreed to a 
lifetime ban from participating in any federally or State funded health care 
program.  Chaudhry was previously sentenced to 2 years and 3 months of 
incarceration and ordered to pay $31,000 in restitution, jointly and severally. 
  Page 46  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  Clinics 
 
Michigan 
 Miami-area resident and manager of a Detroit-area health clinic 
Alejandro Haber and his son and clinic-owner, Emilio Haber, were sentenced 
after pleading guilty to conspiracy to commit health care fraud.  According to 
court documents, the Habers conceived and oversaw fraud schemes 
involving Ritecare LLC.  Between August 2007 and October 2009, the Habers 
and their co-conspirators billed Medicare for medically unnecessary tests 
and services performed by Ritecare.  The Government contended that they 
used patient recruiters to offer kickbacks to patients and coach patients to 
feign symptoms, which were used as justification for the clinics physicians 
to order unnecessary diagnostic tests.  Alejandro Haber was sentenced to 3 
years and 4 months of incarceration and ordered to pay over $5.3 million in 
restitution, jointly and severally.  Emilio Haber was sentenced to 5 years of 
incarceration and ordered to pay $6.3 million in restitution, jointly and 
Michigan 
severally.  
 Brother and sister Henry and Marieva Briceno and Marievas 
daughter, Karina Hernandez, were all sentenced in a Medicare fraud scheme.  
The trio, along with co-conspirators Isaac Carr and Daron Elder, fraudulently 
organized and operated three diagnostic testing clinics in Eastern Michigan:  
Alpha & Omega MC, Blessed MC, and Manuel MC.  According to court 
documents, between May 2007 and January 2010, the three clinics 
submitted false claims to Medicare for medically unnecessary services.  The 
defendants paid drivers to recruit, drive, and pay kickbacks to Medicare 
beneficiaries to induce them to visit the clinics.  The United States alleged 
that the beneficiaries were recruited from soup kitchens and paid to sign 
paperwork indicating they had received diagnostic testing, including nerve 
conduction testing, that was medically unnecessary.  Marieva Briceno was 
sentenced to 5 years of incarceration and ordered to pay $2.9 million in 
restitution, jointly and severally.  Additionally, Marieva was excluded by OIG 
for 10 years.  Henry Briceno was sentenced to 24 months of incarceration 
and ordered to pay $592,813 in restitution, jointly and severally.  Hernandez 
was sentenced to 3 years of incarceration.  Elder and Carr were each 
sentenced to 1 year of incarceration and ordered to pay $2.99 million and 
$H1o.2s pmiitlalilosn  in restitution, respectively, jointly and severally.   
New Jersey    
AHS Hospital Corp.;Atlantic Health System, Inc., and Overlook 
Hospital (collectively, AHS) agreed to pay $8.9 million to resolve allegations 
that it violated the FCA.  AHS allegedly admitted to the hospital patients who 
did not meet medical necessity criteria, but, instead, required only 
observation and evaluation.  AHS billed Medicare for the more expensive 
inpatient services.  In addition,,AHS agreed to enter into a 5-year CIA with 
OIG that requires independent reviews of AHSs medical necessity decisions 
regarding inpatient admissions and lengths of inpatient stays.  
  Page 47  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  Physicians 
 
Washington  
Antoine Johnson, M.D., and his mother, Lawanda Johnson, were 
sentenced for health care fraud and filing false income tax returns.  The pair 
owned and operated four medical clinics in Washington that operated under 
the names Broadway Clinic and Johnson Family Practice.  According to court 
documents, Antoine Johnson, the sole physician for the clinics, used three of 
them to write a high number of prescriptions to thousands of patients for 
narcotic pain medications, such as oxycodone and methadone, often while 
providing little or no medical care.  Lawanda Johnson was the business 
manager and supervisor of the nonmedical staff.  The Johnsons primary 
business plan was to provide prescriptions for controlled substances, 
thereby cultivating patients who returned to the clinics each month to get 
new prescriptions.   
The Johnsons collected significant sums for these visits and further inflated 
the treatment code levels when billing these visits to the health care 
programs.  In January 2009, the pair fled to Madagascar after search 
warrants were executed.  The U.S. State Department worked with the Federal 
Bureau of Investigation and Madagascar authorities, resulting in the return 
of the Johnsons to the United States, where they were arrested and held for 
trial.  Antoine Johnson was sentenced to 12 years and 7 months of 
incarceration and ordered to pay $1.28 million in restitution, jointly and 
severally.  Lawanda Johnson was sentenced to 7 years and 3 months of 
incarceration and ordered to pay $1.22 million in restitution, jointly and 
severally.  Additionally, Antoine and Lawanda were each excluded by OIG for 
Colorado   .
40 years and 30 years, respectively. 
Steven Spillers, M.D, agreed to pay $747,013 to settle allegations 
that he submitted improper claims to Medicare.  Spillers is a neurologist who 
performs intraoperative monitoring (IOM) for companies throughout the 
United States.  IOM involves remote monitoring of a patients nervous system 
during surgery.  Under Medicare rules, a physician is permitted to bill for the 
professional component of IOM as a telehealth service but the physician is 
required to bill for the actual time spent on a per-hour basis, regardless of 
the number of cases simultaneously being monitored.  The United States 
alleged that Spillers routinely conducted multiple IOM services 
simultaneously in his office and billed Medicare on an hourly basis for each 
patient he was monitoring concurrently, instead of on an hourly basis 
overall.  Consequently, Spillers billed in excess of 24 hours per day.  Spillers 
agreed to enter into a 5-year Integrity Agreement with OIG in addition to the 
sHeottmleme eHnet aagltrhee Amgeentn. cies 
Florida  
Marietha Morales and Eduardo Dominguez were sentenced in a 
multimillion-dollar fraud scheme.  Morales was president and Dominguez an 
employee of Prime Home Health Services, Inc., a Florida home health agency 
that purported to provide home health care and physical therapy services to 
eligible Medicare beneficiaries.  According to court documents, between 
  Page 48  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
February 2005 and April 2011, Morales and her co-conspirators paid 
kickbacks and bribes to patient recruiters through Dominguez.  In return, the 
recruiters provided patients to Prime Home Health, as well as prescriptions, 
plans of care (POC), and certifications for medically unnecessary therapy and 
home health services.  Prime Home Health employees falsified patient files 
for Medicare beneficiaries to appear as though they qualified for the 
services.  Morales used these prescriptions, POCs, and medical certifications 
to fraudulently bill Medicare for home health care services.  Morales and 
Dominguez were sentenced to 9 years and 3 years and 10 months of 
incarceration, respectively.  In addition, Morales was ordered to pay 
$14 million in restitution, jointly and severally, and Dominguez was ordered 
Htoo psapy iocvee rC $a2r em illion in restitution. 
Kansas  
Hospice Care of Kansas (HCOK) agreed to pay $6.1 million plus 
interest to resolve allegati.ons that it violated the False Claims Act.  Between 
January 2004 and December 2008, HCOK, a wholly owned subsidiary of 
Voyager HospiceCare, Inc, allegedly submitted claims to Medicare for 
services provided to beneficiaries that did not meet hospice eligibility 
requirements.  Specifically,  HCOK allegedly engaged in certain business 
practices that contributed to submission of claims for patients who did not 
have terminal prognoses of 6 months or less if their diseases ran their 
normal course, including providing compensation to staff based on patient 
admissions and census, pressuring staff to meet admissions and census 
targets, adopting procedures that delayed and discouraged discharges of 
ineligible patients, instructing staff to inaccurately or misleadingly document 
patients medical conditions, and implementing an inadequate compliance 
Arizona  
program to review patients for hospice eligibility. 
Hospice Family Care, Inc. (HFC), agreed to pay $3.7 million to 
resolve its liability for alleged violations of the False Claims Act.  HFC, which 
was owned by registered nurses Nancy Smith and Nancy Turner, provided 
hospice care under Medicares hospice benefit.  To be eligible for hospice 
care, the patients attending physician and the hospices medical director 
must certify that the patient is terminally ill.  Medicare reimbursement is 
based on the level of care provided by the hospice.  According to court 
records, HFC allegedly submitted claims to Medicare for the care of patients 
who were completely or partially hospice ineligible or were provided a 
higher level of hospice care than was necessary or allowable.  As part of the 
agreement, Smith and Turner agreed to be excluded from participation in 
FMedaenraalg heeda lCtha craer e programs for 7 years. 
Florida  
WellCare Health Plans, Inc., agreed to pay $137.5 million to the 
Federal Government and nine States to resolve four lawsuits involving 
alleged violations of the False Claims Act.  The Government alleged that 
WellCare falsely retained payments from Florida Medicaid, Florida Healthy 
Kids, and Illinois Medicaid for behavioral health services; falsely retained 
  Page 49  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
payments from Florida Medicaid for newborns; submitted falsely inflated 
performance data for call centers; knowingly permitted Florida Medicaid to 
rely on overpriced encounter data for future premium rate setting and other 
uses; operated a sham Special Investigative Unit that failed to properly audit 
WellCare providers; upcoded risk scores for Medicare plans; and engaged in 
sales and marketTinogd da bFuasrheas, including cherrypicking of healthy patients to 
avoid future costs.  Five former WellCare executives, including former chief 
executive officer  , were indicted in March 2011 and are awaiting 
trial.  WellCare entered into a 5-year CIA with enhanced oversight and 
California  
reporting obligations, in addition to the settlement.  
SCAN Health Plan, Senior Care Action Network, and Scan Group 
(collectively, SCAN) agreed to pay $322 million to resolve allegations that it 
violated the False Claims Act.  SCAN is a Medicare Advantage (i.e., Medicare 
Part C) plan, which is focused on providing services to beneficiaries who are 
dually eligible for Medicare and Medicaid.  The United States alleged that 
SCAN provided misleading information about beneficiaries diagnoses, 
resulting in inflated capitation payments, and improperly retained 
Povheyrspiacyaml eTnhtse.r  a  py 
Oregon 
 Victoria Vestal agreed to pay $231,928, plus interest, to resolve 
allegations that she submitted false claims to Medicare.  Vestal is a licensed 
physical therapist, who owns two physical therapy clinics in Oregon and 
Washington State.  Vestal, through her companies Pacific Crest Physical 
Therapy, Inc., and Ocean Beach Physical Therapy, Inc., allegedly billed 
Medicare improperly for services, including ultrasounds, e-stimulations, and 
eIdxeerncitsiety t rTehatemfet nts, which were provided by physical therapy assistants. 
New York 
 Tikran Takvoryan was sentenced to 8 years and 1 month of 
incarceration and ordered to forfeit $10,000 after pleading guilty to 
racketeering charges.  Takvoryan was involved with the Mirzoyan-Terdjanian 
crime organization, which was purportedly responsible for credit card fraud, 
extortion, and Medicare fraud between 2006 and 2010.  Takvoryan 
knowingly obtained the identities of doctors and beneficiaries, which were 
used to defraud Medicare.  Takvoryan also assisted with the computer and 
New Jersey 
technological needs of the organization in furtherance of the fraud.  
 Patrick Lynch was sentenced to 4 years of incarceration and 
ordered to pay $40,048 in restitution for health care fraud and fraud with 
identification documents.  Lynch jointly owned Visiting Doctors of New 
Jersey, LLC, but the company was dissolved after he allegedly failed to pay his 
business partner for his services.  According to the investigation, Lynch then 
began rendering home medical care to Medicare patients on his own, 
including writing prescriptions, even though he was not a licensed 
practitioner.  Additionally, Lynch stole his former partners identification and 
  Page 50  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
used his National Provider Identifier number to bill Medicare for the 
sMerivsiucsese  hoef p Grorvaindet dF. unds 
New York 
 District Council 1707, Local 95 Head Start Employees Welfare 
Fund (welfare fund), agreed to pay over $4.8 million to resolve allegations 
that it violated the False Claims Act.  Head Start is a Federal program that 
provides grants to local public and private agencies to provide 
comprehensive child development services to economically disadvantaged 
children and families.  The welfare fund administers the hospitalization 
insurance provided to employees carrying out the Head Start programs and 
submits invoices to the New York City Administration for Childrens Services 
(ACS) for reimbursement for hospitalization insurance premiums.  ACS 
reimbursed the welfare fund for the insurance premiums with Head Start 
grant money.  According to court documents, the welfare fund allegedly 
charged ACS higher rates for hospital insurance premiums than it ultimately 
paid for the premiums.  
Medicaid Fraud Control Units 
Funding and Accomplishments   
Medicaid Fraud Control Units (MFCU) are key partners in the fight against 
fraud, waste, and abuse in State Medicaid programs.  In FY 2011, HHS 
awarded $156.7 million in Federal grant funds to 50 MFCUs (including 1 in 
Washington, DC), which employed a total of 1,833 individuals.  Collectively, 
in FY 2011, MFCUs reported 14,819 investigations, of which 10,685 were 
related to Medicaid fraud and 4,134 were related to patient abuse and 
neglect, including misappropriation of patients private funds.  The cases 
resulted in criminal charges against or indictments of 1,408 individuals, 
including 1,011 for fraud and 397 for patient abuse and neglect, including 
patient funds cases.  In total, 1,230 convictions were reported in FY 2011, of 
which 824 were related to Medicaid fraud and 406 were related to patient 
Jaobuinset  aInnvde nsetgilgeactt,i oinnclsu ding patient funds cases.  
Virginia    
,
Univer sal Health Services, Inc.(UHS), and its subsidiaries, 
Keystone Education and Youth Services, LLC and Keystone Marion, LLC, 
d/b/a KeystoneMarion Youth Center, agreed to pay over $6.85 million to 
resolve allegations that it submitted false and fraudulent claims to Medicaid.  
Between October 2004 and March 2010, the entities allegedly provided 
substandard psychiatric counseling and treatment to adolescents in 
violation of Medicaid requirements.  The United States alleged that UHS 
falsely represented Keystone Marion Youth Center as a residential treatment 
facility providing inpatient psychiatric services to Medicaid-enrolled 
  Page 51  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
children when in fact it was a juvenile detention facility.  The United States 
further alleged that neither a medical director nor licensed psychiatrist 
provided the required direction for psychiatric services or for the 
development of initial or continuing treatment plans.  The settlement further 
resolved allegations that the entities filed false records or statements to 
Medicaid when they filed treatment plans that falsely represented the level 
of services that would be provided to the patients.  This was a joint 
North Carolina  
investigation with the Virginia MFCU.  
Thomas Hunter and Janet Johnson-Hunter, owners and 
operators of Coastline Care, Inc., an ambulance and medical transport 
company, entered into a settlement agreement for $950,178.  The settlement 
resolved allegations that, between January 2002 and October 2006, the 
Hunters submitted Medicare and Medicaid claims for nonemergency 
dialysis-patient ambulance transports that were not medically necessary 
because the patients were ambulatory and/or not bed-confined.  Specifically, 
the Hunters allegedly instructed employees to omit the true condition of 
patients from the ambulance call reports when they did not meet the 
Medicare and Medicaid reimbursement requirements.  As part of the 
settlement, Janet Johnson-Hunter agreed to an exclusion of 15 years based 
on her conviction of conspiracy to make false statements relating to health 
care matters.  In the criminal case, she was sentenced to 2 years and 4 
months of incarceration and ordered to pay $475,089 in restitution.  This 
California  
was a joint investigation with the North Carolina MFCU.   
Dr. Norman Buetow was sentenced to 5 years of probation and 
ordered to pay over $1.9 million in restitution, jointly and severally, after 
pleading guilty to making a false statement to a Government agency.  Buetow 
was a licensed p. hysician who purported to be the owner and physician in 
charge of three clinics in California that were established and operated by 
Rudik Avakyan  According to court documents, the defendants conspired to 
offer and make payments to Medicare patients in exchange for their 
Medicare numbers.  In addition, the defendants paid cappers for the 
referral of Medicare patients to the clinics.  The defendants submitted 
fraudulent claims to Medicare for services that were not performed, were 
not performed as billed, or were performed by persons other than the 
provider under whose identification those services were billed.   
The defendants also falsely stated that the clinics would be owned and 
operated by a licensed physician when, in fact, the true owner was Avakyan, 
who was not a physician.  During the investigation, Buetow knowingly made 
false statements to OIG agents, deliberately trying to conceal his role and 
relationship to the co-defendants.  Buetow was excluded by OIG for 5 years 
on the basis of the conviction.  Avakyan was previously sentenced to 3 years 
and 3 months of incarceration and ordered to pay more than $2 million in 
restitution, jointly and severally.  This was a joint investigation with the FBI, 
DOJ, and the Bureau of Medi-Cal Fraud and Elder Abuse.    
  Page 52  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
  Sanction Authorities and Related Administrative 
 
Actions 
 
Various Federal laws provide authorities 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.  (See Appendix D for a 
summary of frequently used sanction authorities.)   
Sanctions include the exclusion of individuals and entities from Federal 
health care programs and the imposition of civil monetary penalties (CMP) 
for submitting false and fraudulent claims to a Federal health care program 
or for violating the anti-kickback statute; the Stark Law; or the Emergency 
Medical Treatment and Labor Act of 1986 (EMTALA), also known as the anti-
patient-dumping law.  
During this semiannual reporting period, OIG imposed 1,911 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 Web site at: 
hPtrtopgs:r/a/mww Ewx.coliug.shihosn.gso v /fraud/enforcement/cmp/index.asp. 
During this semiannual reporting period, OIG excluded 1,867 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/. 
Texas  
For example: 
Kimberly Saenz was excluded from participation in Federal health 
care programs for 60 years after she was sentenced to life in prison without 
parole for capital murder.  In April 2008, Saenz was a nurse at a dialysis 
center in Lufkin, Texas, which served Medicare beneficiaries.  During the 
time of her employment, the facility had an unusual rate of patients who 
went into cardiac arrest while undergoing dialysis.  According to court 
records, on April 28, 2008, two patients saw Saenz draw bleach into a 
syringe and inject it into the dialysis lines of patients, causing them to suffer 
distress and respiratory arrest.  It was determined that because Saenz 
injected bleach into patients dialysis lines or directly into their 
bloodstreams at least five died and five others suffered cardiac arrest that 
California  
did not result in death.  
Conrad Murray, pop singer Michael Jacksons doctor, was 
excluded for a minimum of 50 years after being convicted of involuntary 
  Page 53  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
manslaughter.  According to court documents, Murray administered 
Propofol, an anesthetic drug used to induce and maintain anesthesia, to 
Jackson each night for over 2 months.  On June 25, 2009, Murray 
administered Propofol, along with another drug, to Jackson and then 
abandoned him.  When Murray returned, he found that Jackson was not 
breathing.  According to court records, Murray waited at least 20 minutes 
before calling emergency personnel.  In November 2011, a jury convicted 
Murray of involuntary manslaughter in Jacksons death.  Murray was 
sentenced to 4 years of incarceration, ordered to pay $101,827,871 in 
restitution, and ordered to cease and desist from practicing medicine in 
Massachusetts 
California.   
 Pharmacist Aloysius Nsonwu was excluded for a minimum 
of 15 years after his convictions in Federal and State courts for conspiracy to 
defraud the Government with respect to claims, Medicaid false claims, 
larceny by false pretenses, and conspiracy.  According to court documents, 
between approximately December 2004 and February 2010, Nsonwu paid 
customers to bring in their Medicare and Medicaid cards so he could submit 
false claims for HIV/AIDS medications without dispensing the medications.  
Many of these individuals were not even HIV positive.  In addition, Nsonwu 
obtained valid prescriptions from Medicaid beneficiaries who were HIV 
positive, but instead of dispensing their medications, he paid them in cash 
for the prescriptions.  Nsonwu was sentenced to 4 years and 1 day of 
incarceration and ordered to pay approximately $555,500 in restitution on 
his State conviction.  He was also ordered to pay approximately $147,700 in 
restitution on his Federal conviction.  In addition, his license to practice as a 
Arizona  
pharmacist was revoked by the Massachusetts State Board of Pharmacy. 
Emilio Luna, an Arizona pediatrician, was excluded indefinitely on 
the basis of the revocation of his license by the Arizona Medical Board.  
According to court records, an FBI agent from the Innocent Images Unit 
signed into a file-sharing program on the Internet and came into contact 
with a person later identified as Luna, who was sharing approximately 
10,000 files.  The FBI agent selected and downloaded files from Luna for 
investigation and found that they contained multiple images of child 
pornography.  Luna was arrested and charged with distributing child 
pornography in interstate commerce, and he was prohibited from practicing 
medicine.  The Medical Board of California revoked Lunas license.  The Texas 
Medical Board also revoked his license.  On September 2010, while on house 
confinement, Luna removed his electronic monitoring unit and fled.  He 
Illinois 
remains a fugitive.  
 Husband and wife Robby and Monica Owens, owners of Great Kids, 
Inc., a day care center, were each excluded for a minimum of 10 years on the 
basis of their convictions of attempt to evade or defeat tax.  Great Kids 
participated in the HHS-funded Child Care Resource and Referral Program.  
According to court documents, the Owenses concealed their correct income 
by using Great Kids account and funds for personal expenses.  They dealt 
primarily in cash to avoid the creation of records.  They withheld taxes from 
employees payroll checks and then failed to pay the employment-related 
  Page 54  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
taxes.  Monica Owens also caused Great Kids to fraudulently obtain funds 
under a Federal program involving a grant, contract, subsidy, loan, 
guarantee, insurance, or other form of Federal assistance.  The Owenses 
were each sentenced to 2 years and 1 month of incarceration and ordered to 
pCaoyr appoprraotxeim Inatteelyg r$i1t6y9 A,2g6r3e ienm reestnittust ion, jointly and severally.  
Many health care providers elect to settle their cases prior to 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.  
OIG may issue penalties to entities that fail to comply with the requirements 
Example of a CIA Violation 
of their CIAs.  More information on CIAs is available on our Web site.  
 On July 3, 2012, OIG imposed penalties totaling 
$100,000 on Church Street Health Management, a network of dental 
pCriovvili dMeros,n feort amrayt ePreianl ablrteiaecsh  Loaf wits  CIA.   
The Civil Monetary Penalties Law (CMPL) authorizes OIG to impose 
administrative penalties and assessments 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.  
During this semiannual reporting period, OIG concluded cases involving 
more than $6.7 million in CMPs and assessments.  The following are among 
Massachusetts 
the CMP actions resolved during this reporting period: 
 Baypointe Rehabilitation and Skilled Care Center, a nursing 
home, agreed to pay $351,255 to resolve its liability under the CMPL.  
Baypointe employed an excluded nurse as its assistant director of nursing 
from January 2006 through July 2009.  OIG excluded the nurse after the 
Mississippi Board of Nursing revoked her license following a positive 
preemployment drug test.  The Government contended that Baypointe 
Missouri 
should have known that the nurse was excluded.  
 Cooperative Home Care agreed to pay $121,000 to resolve its 
liability under the CMPL for employing an excluded individual.  From 
February 2009 to August 2010, Cooperative employed an excluded physician 
in an administrative position.  The Government contended that Cooperative 
Massachusetts 
knew or should have known that the individual was excluded.   
 Stephan Babirak and Metabolic Leader, LLC, agreed to pay 
$17,087 to resolve liability under the CMPL for improperly submitting claims 
to Medicare.  According to court records, Babirak and Metabolic Leader 
allegedly billed Medicare for new-patient evaluation and management (E/M) 
office visits for current patients, upcoded E&M visits, and upcoded incident 
  Page 55  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
to services provided by nurse practitioners and billed under Babiraks 
Iowa  
provider number while Babirak was not in the office.   
Hy-Vee, Inc., a pharmacy, agreed to pay $831,870 to resolve its 
liability under the CMPL.  From 2006 through 2011, Hy-Vee employed an 
excluded individual.  The Government contended that Hy-Vee should have 
Pknaotwienn tth Datu tmhep inindgiv i dual was excluded.  
Some of the CMPL cases that OIG resolved between April 1, 2012, and 
September 30, 2012, 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 
Minnesota  
examples of settlements under this statute: 
Hendricks Community Hospital agreed to pay $20,000 to 
resolve allegations that it violated EMTALA.  The Government alleged that 
Hendricks failed to provide a medical screening examination and stabilizing 
treatment for a 72-year-old man who arrived at the emergency room with 
complications after a medical procedure.  A triage nurse did not examine the 
Texas  
man and told him to drive to a hospital that was 40 miles away.  
Texas County Memorial Hospital (TCMH) agreed to pay $20,000 to 
resolve allegations that it violated EMTALA.  The Government alleged that 
TCMH failed to provide a medical screening examination to a minor who 
arrived at TCMHs emergency room with an emergency medical condition.  
A screening examination was not done, and a TCMH clerk advised the family 
to take the patient to her primary care physician.  
Provider Self-Disclosure Protocol  
 
OIG is committed to assisting health care providers and suppliers in 
detecting and preventing fraud and abuse.  Since 1998, we have made 
available comprehensive guidelines describing the process for providers to 
voluntarily submit to OIG self-disclosures of fraud, waste, or abuse.  The 
provider self-disclosure protocol gives providers an opportunity to minimize 
the potential costs and disruption that a full-scale OIG audit or investigation 
might entail if fraud is uncovered.  The self-disclosure also allows the 
provider to negotiate a fair monetary settlement and potentially avoid being 
excluded from participation in Federal health care programs.  
The protocol guides providers and suppliers through the process of 
structuring a disclosure to OIG about matters that constitute potential 
violations of Federal laws.  After making an initial disclosure, the provider or 
supplier is expected to thoroughly investigate the nature and cause of the 
matters uncovered and make a reliable assessment of their economic impact.  
OIG evaluates the reported results of each internal investigation to 
determine the appropriate course of action.  The self-disclosure guidelines 
  Page 56  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
are available on the OIG Web site at 
https://www.oig.hhs.gov/fraud/selfdisclosure.asp. 
During this reporting period, self-disclosure cases resulted in $53.3 million 
Georgia  
in HHS receivables.  The following are examples: 
Tenet Healthcare Corporation, an investor-owned health care 
delivery system, agreed to pay $42,750,000 and enter into a CIA to resolve 
allegations that, from May 2005 through December 2007, it violated the FCA 
and CMPL by submitting claims to Medicare for inpatient rehabilitation 
facilities (IRF) patient admissions when the medical and rehabilitative needs 
of the patient did not meet Medicare coverage criteria for IRF admission.   
Tenet operates 50 hospitals and 99 outpatient centers in 11 States.  Tenet 
self-disclosed to OIG through the Self-Disclosure Protocol that one of its IRF 
hospitals did not properly assess patients prior to admission and failed to 
determine whether IRF coverage criteria had been met for purposes of 
complying with the Medicare payment rules.  OIG, DOJ, and the U.S. 
Attorneys Office for the Northern District of Georgia extended the 
Pennsylvania  
investigation to all Tenet IRF hospitals.   
Animas Corporation agreed to pay $1,683,000 to resolve its 
liability under the CMPL.  Animas self-disclosed that it submitted claims for 
reimbursement to Medicare and Medicaid for infusion pumps and supplies 
that were based on signed written orders from physicians, which had been 
New York    
altered without the physicians approval.   
Good Samaritan Hospital Medical Center and South Bay OB/GYN
agreed to pay $1,753,447 to resolve their liability under the CMPL.  Good 
Samaritan and South Bay disclosed that Good Samaritan paid salary and 
benefits under a contract for clinical teaching, administrative, and 
supervisory services to five physicians associated with South Bay.  The salary 
and benefits were above fair market value and violated the Stark Law and 
the Anti-Kickback Statute.  This case was resolved jointly with New York 
Utah  
States Office of Medicaid Inspector General.  
Billings Clinic, an integrated nonprofit health care organization, 
agreed to pay $284,098 to resolve its liability under the CMPL.  Billings self-
disclosed to OIG that, from August 2005 until October 2011, it employed an 
excluded individual as a licensed practical nurse. 
   
  Page 57  HHS Office of Inspector General  Legal and Investigative Activities 
Semiannual Report to Congress  Fall 2012  Related to Medicare and Medicaid 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  https://oig.hhs.gov 
 
 
 
  Page 58  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
 
 
Selected organizational abbreviations used in this section: 
Public Health Reviews 
 
 
CDC  Centers for Disease Control and Prevention 
FDA  Food and Drug Administration 
HRSA  Health Resources and Services Administration 
NIH  National Institutes of Health 
Public Health Agencies  
Management and Program Oversight 
CDCVaccines Mismanaged in Storage    
Vulnerabilities in Vaccine Storage and Management Threaten Efficacy 
 
A June 2012 report revealed that providers in the Vaccines for Children 
(VFC) program exposed some vaccines in storage to inappropriate 
temperatures, which could reduce vaccine potency and efficacy, increasing 
the risk that children are not provided with maximum protection against 
preventable diseases.  The VFC program is a Medicaid benefit that provides 
free vaccines to eligible children.  CMS delegates the programs 
implementation to the Centers for Disease Control and Prevention (CDC), 
which purchases VFC vaccines and distributes them to VFC providers.  We 
found that some vaccines stored by 76 percent of 45 selected providers were 
exposed to inappropriate temperatures for at least 5 cumulative hours.  We 
also found expired vaccines stored together with nonexpired vaccines, 
increasing the risk of mistakenly administering the expired vaccine.  The 
selected providers generally did not meet vaccine management 
requirements or maintain required documentation.   
RecommendationsCDC should work with VFC grantees and providers to 
ensure that VFC vaccines are stored according to requirements, expired 
vaccines are ideMnetidfiiceadi da nVda csceipnaersa ftoerd C fhrioldmr enno Pnreoxgpriaremd:  v Vaaccccininees ,S gtroarnagteee asn  d 
Mbeatntearg memaennatge providers vaccine inventories, and grantees meet oversight 
requirements.  
FDAMed.i  cOaElI D-0e4v-1ic0e-0s0 430.  June 2012.  Full Text.   
Resolving Scientific Disagreements on Regulatory Decisions 
 We reviewed 
36 medical device submissions for which FDAs Center for Devices and 
Radiological Health (CDRH) had scientific disagreements on regulatory 
decisions between 2008 and 2010 and found a number of challenges 
associated with the resolution process.  CDRH annually processes about 
  Page 59  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
 
 
6,000 submissions for approval of medical devices that require regulatory 
decisions.  Scientific disagreements are defined as being consequential to a 
regulatory decision where taking one position on an issue would lead to a 
different decision than taking another position.  CDRH did not start formally 
tracking such disagreements until 2010.  We found that CDRH faces broad 
challenges in identifying and resolving scientific disagreements because of 
uncertainty about regulatory definitions and processes and staff perceptions 
about expressing differences of opinion.  The nature and resolutions of the 
36 disagreements we reviewed varied widely.  The disagreements often 
involved multiple issues, and most of their resolutions did not lead directly 
to the approval or clearance of devices.  Most administrative files related to 
the disagreements contained required documentation, but accountability for 
file completeness was unclear.  Also, not all of CDRHs managers and 
reviewers had received training on the new procedures implemented in 
2009.   
RecommendationsFDA should define more clearly its requirements for 
documenting and resolving scientific disagreements, train all reviewers and 
managers on the new policies and proceDdisucrreest ifoonra rreys oSclvieinngti fsicci eDnistaifgicr eements 
Rdiesgaagrrdeienmg eMnetds,i caanld D mevoicree  Rcleegaurllayt aosrsyi gDne caicscioonusntability for the contents of the 
administrative files of all submissions.  
.  OEI-01-10-00470.  June 
2H0R1S2A.  FulHl Teeaxltt.h    Center Program  
Multiple Issues Found With a Grantees Claims and Financial Performance 
 
We reviewed a grantee that received funding pursuant to the Health Center 
Program administered by the Health Resources and Services Administration 
(HRSA).  Our September 2012 report revealed that for selected grants and 
budget periods, Soundview Health Care Network, a nonprofit grantee 
organization that  operates a network of five health centers, claimed Federal 
grant expenditures totaling $113,603 that were unallowable because of 
deficiencies in the grantees internal controls.  We could not determine the 
allowability of an additional $5,211,598 claimed.  Some of the funds were 
not accounted for separately from other operational funds.  Regarding 
performance measures, the grantees cash balances were significantly lower 
than the recommended 60-day minimum and there were indications the 
grantee did not have enough cash on hand to pay its short-term liabilities.  
We found problems with the grantees liquidity, accounts receivable 
collections and a decline and net loss in earnings.     
RecommendationsHRSA should impose special award conditions to 
address shortcomings in financial performance measures; ensure that the 
grantee refunds the unallowable amount we calculated and the $5,211,598 
set aside (or determine whether any of the costs set aside were allowable); 
impose specified award conditions; ensure that the grantee develops policies 
and procedures for determining the reasonableness, allocability, and 
allowability of expenditures; and educate the grantee on Federal 
requirements for after-the-fact certifications and the proper period to charge 
  Page 60  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  Soundview Health Care Network Did Not Meet Select Financial 
  Performance Measures and Claimed Unallowable Federal Grant Expenditures
costs.  
.  
NA-I0H2-11G-0ra2n00ts4 .a  Fnudll  CTeoxnt.t ract Management 
Unallowable Transactions at Florida State University 
 The university charged 
unallowable transactions to HHS grants, contracts, and other agreements 
(awards) during fiscal years 2009 and 2010.  In addition to receiving its 
regular funding through grants and contracts, the university was awarded 28 
grants with funding provided by the American Recovery and Reinvestment 
Act of 2009.  In our sample of 100 salary transactions, 53 were allowable but 
47 were not, and in our sample of 100 nonsalary transactions, 55 were 
allowable but 45 were not.   
The unallowable transactions occurred because the university did not 
provide adequate oversight to ensure consistent compliance with Federal 
regulations.  Although its finance and accounting procedures often 
incorporated text from Federal regulations, the university largely left it to 
the discretion of its individual colleges, departments, and principal 
investigators to interpret the procedures correctly and to comply with 
Federal regulations.  In addition, the university did not review transactions 
to ensure that they complied with Federal regulations. 
RecommendationsFlorida State University should refund the amounts we 
dFleosriigdnaa Stetadt teo U tnhiev eFresditeyr aDli Gd oNvoetr Anmlweanyts  aCnladi men Shealnecctee odv Ceorsstisg hCth oafr gcehda rDgierse cttol y 
Ftoe dHeHrSa lA awwaarrddss i nto A ecncsourdrea nccoen Wsisittehn Fte cdoemrapl lRiaengcuela wtiiothn sF aendde rNaIl Hre Gguuildaetiloinness.  
.  
AN-I0H4-11S-u0p10e9r5fu.  nJudly A 2p0p12ro.  Fpurlila Tteioxtn. s    
Superfund-Related Financial Activities at the National Institute of 
Environmental Health Sciences Found Compliant 
 During FY 2011, the 
National Institute of Environmental Health Sciences (NIEHS) administered 
its annual Superfund appropriations in accordance with applicable laws and 
regulations.  NIEHS obligated approximately $79 million and disbursed 
approximately $76 million in Superfund resources during FY 2011.  The 
Superfund is used to respond to emergency environmental conditions that 
are hazardous to health and to pay for the removal of toxic substances.  The 
Federal law that established the Hazardous Substance Response Trust Fund 
(Superfund) required that the Inspectors General of Federal organizations 
Superfund Financial Activities at the 
with Superfund responsibilities audit all uses of the Superfund.   
National Institute of Environmental Health Sciences, Fiscal Year 2011.
The report has no recommendations.  
  
A-04-12-01013.  July 2012.  Full Text.   
   
  Page 61  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  NIHCompliance With Appropriations Laws  
 
Antideficiency Act Violations 
 We found issues in two contracts administered 
by the National Institute of Allergy and Infectious Diseases (NIAID) that 
violated the Antideficiency Act or the bona fide needs rule.  The 
Antideficiency Act prohibits an agency from obligating or expending funds in 
advance of or in excess of an appropriation unless specifically authorized by 
law.  Federal statutes specify that a fiscal year appropriation may be 
obligated only to meet a legitimate (bona fide) need arising in or continuing 
to exist in the appropriations period of availability.  From November 2008 
through February 2009, an HHS internal review group assessed 176 HHS 
contracts, including 21 NIH contracts.  Our reviews of the NIH contracts 
assessed compliance with the purpose, time, and amounts requirements 
specified in appropriations statutes.  Recommendations included making 
monetary adjustments and reporting Antideficiency Act violations as 
appropriate.   
Report 1 RecommendationsNIAID should record expenditures for each 
program year against the appropriate fiscal year appropriations; deobligate 
$7.3 million of fiscal year 2003 funds and return those canceled funds to the 
Treasury; resolve its bona fide needs violations; report an Antideficiency Act 
violation for obligating fiscal year funds in advance of an appropriation for 
all program years reviewed, if not previously reported; report an 
Antideficiency Act violation if $10.3 million (estimated) of fiscal year 2008 
funds, sufficient fiscal year 2009 funds, and $20.2 million of current fiscal 
year funds are unavailable, if not prAevpiporuosplryi aretipoonrst eFdu;n adnindg r feopro Nrta,t iino nal 
Iancsctoitrudtaen ocfe A wllietrhg 3y 1a nUd.S I.nCf. ec t1i5o5us4 ,D ainseya asdesju Csotnmteranctt t No 0th1e-A CIo-3n0t0ra6c8t  Wusiitnhg P PD 
Dcuervreelonpt mfisecnatl,  yLePar appropriations.  
.  A-03-10-03116.  September 2012.  Full Text 
Report 2 RecommendationsNIAID should record expenditures for each 
program year against the appropriate fiscal year appropriations; resolve its 
bona fide needs violations; report an Antideficiency Act violation for 
obligating fiscal year 2005 funds in advance of an appropriation, if not 
previously reported; report an Antideficiency Act violation if NIAID does not 
have $16.5 million (estimated) of fiscal year 2008 funds, $6.9 million of 
current fiscal year funds, and, if needed, appropriate fiscal years 2010 and 
2011 funds for expenditures recorded after our reviewA, pifp nroopt rpiraetvioionus sly 
rFeupnodrintegd f;o arn Nda rteiopnoarlt ,I inns taictucoter doaf nAcllee rwgiyt ha n3d1  IUn.fSe.cCt.i ou 1s5 D5i4se, aanseys  aCdojnutsrtamcet nt to 
tHhHeS CNo2n6t6ra-2ct0 0u5si-n0g0 0c2u2rrCe Wnti tfihs cPaPlD y eDaerv aeplopprmopernita, tLioPns.  
.  A-03-10-03118.  
September 2012.  Full Text.   
  Page 62  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  Public Health-Related Legal Actions and 
 
Investigations 
Health Education Assistance Loan Program    
Under the Health Education Assistance Loan (HEAL) program, the HHS 
Health Resources and Services Administration guarantees 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 
indebtedness.  After PSC has exhausted efforts to secure repayment of a debt, 
it declares an individual in default.  Thereafter, the Social Security Act 
permits exclusion from Medicare, Medicaid, and all other Federal health care 
programs for nonpayment of these loans.  
Exclusion means that the individual may not receive reimbursement under 
these programs for professional services rendered, nor can any other 
provider receive reimbursement for services ordered or prescribed by the 
individual.  OIG is responsible for excluding individuals who have defaulted 
HonE HAELA ELx lcolaunssi ofrnoms  participation in Federal health care programs. 
During this semiannual reporting period, 34 individuals and related entities 
were excluded as a result of PSC referral of their cases to OIG.  Individuals 
who have been excluded as a result 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 debts are 
repaid and they may not appeal the exclusions. 
After being excluded for nonpayment of their HEAL debts, a cumulative 
2,449 individuals chose to enter into settlement agreements or completely 
repay their debts.  That figure includes 56 individuals who entered into such 
settlement agreements or completely repaid their debts during this 
semiannual reporting period.  The amount of money being repaid through 
settlement agreements or through complete repayment is $187 million.  Of 
that amount, $5.9 million is attributable to this semiannual reporting period. 
Practitioners in the following states entered into settlement agreements to 
  Louisiana 
repay the amounts indicated: 
  Pennsylvania 
 Podiatrist ($1,097,762) 
  Arizona 
 Dentist ($277,324) 
  California 
 Osteopath ($190,290) 
 Dentist ($173,181) 
  Page 63  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
    California 
 
 Dentist ($167,700) 
HAdumminainst rSaetirovni cfoers C Rheilvdireewn asn  d Families 
 
Oversight of Head Start Eligibility 
Improvements in Oversight of Program Eligibility 
 The Administration for 
Children and Families (ACF) strengthened its oversight of Head Start 
program eligibility between FYs 2010 and FY 2011.  ACF altered its FY 2011 
triennial reviews to determine whether grantees kept on file the source 
documents proving childrens eligibility and began performing unannounced 
reviews.  ACF promulgated draft regulations that, once final, will require 
grantees to keep eligibility documents on file.  We found that ACF was not 
consistent in issuing findings to grantees missing eligibility information in 
FY 2011.  In FY 2012, ACF took action to reduce this variation when issuing 
findings.  Also, ACF developed an online complaint process for the Head Start 
program to capture complaints that could help the agency uncover problems 
with grantees.  Our review was a followup to Government Accountability 
Office (GAO) testimony at a May 2010 congressional hearing about potential 
eligibility fraud at eight Head Start grantees.  At the same hearing, ACF 
Memorandum Report: ACF 
committed to improving its oversight of eligibility.   
Strengthened Its Oversight of Head Start Eligibility in Fiscal Year 2011
The report had no recommendations.  
.  
OCEhIi-l0d5 S-1u1p-0p0o1r4t0 E. n Jufonerc 2e0m12e. n Ftu ll Text.   
Congress annually appropriates funds to OIG to investigate noncustodial 
parents who fail to pay court-ordered child support.  OIG works closely with 
the Office of Child Support Enforcement (OCSE); DOJ; U.S. Attorneys Offices; 
the U.S. Marshals Service; and other Federal, State, and local partners to 
expedite the collection of child support. 
In 1998, OIG and OCSE initiated Project Save Our Children, a child support 
initiative that united the efforts of multiagency, multijurisdictional 
investigative collaborations for child support enforcement.  OCSE receives 
child support cases from the States; conducts preinvestigative analyses; and 
forwards the cases to OIG, where they are assigned and investigated.  This 
approach streamlines the process by which the cases best suited for criminal 
prosecution are identified, investigated, and resolved.  OIG also receives 
referrals directly from the States. 
  Page 64  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  Investigative Outcomes  
 
OIG investigations of child support cases nationwide resulted in 33 
convictions and court-ordered restitution and settlements of $2.4 million 
during this semiannual period.  Examples of OIGs enforcement results for 
Arizona 
failure to pay child support included the following:  
 One of OIGs most wanted deadbeat parents, Andre Rison, was 
sentenced to 5 years of probation and ordered to pay restitution of $322,992 
for failure to pay child support.  Rison, a former NFL wide receiver, was 
ordered by a court in May 1999 to make monthly child support payments of 
$2,358 for his son.  Despite earning an NFL salary for more than a decade, 
Rison admitted that he willfully and unlawfully failed to pay child support 
Texas  
for more than 5 years.  
Frederick Leroy Borden was sentenced to 5 years probation and 
ordered to pay restitution of $243,055 for failure to pay child support.  
Borden purportedly is a homeopathic medicine practitioner who was living 
in Connecticut.  According to court records, in August 2004, Borden was 
ordered to pay $2,400 per month in child support to the custodial parent of 
his seven children, who live in Texas.  At the time of his arrest in February 
South Dakota  
2012, Borden had not made any of the payments.  
Jason Child was sentenced to 5 years probation and ordered 
to pay $33,869 in restitution for failure to pay child support.  According to 
court records, Child, who lives in Oklahoma, willfully and unlawfully failed to 
pEanyg paagsitn dgu eth cehi lPdu sbuplipco irnt  oCbalipgtautiroinnsg d Dateinagd tbo eJuante P 2a0r0e8n. t  s  
The OIG Child Support Enforcement Web site continues to enlist the publics 
help in bringing some of OIGs most wanted child support fugitives to justice.  
The site includes photographs and other information on these deadbeat 
parents.  It also has an online tip form and OIGs hotline number  
(1-888-476-4453) to report deadbeat-parent-related information in English 
or Spanish, 24 hours a day, 365 days a year.  The site is available at 
https://oig.hhs.gov/fraud/child-support-enforcement/.  
Administration for Community Living 
Senior Medicare Patrol Projects 
Projects May Not Be Receiving Full Credit for Savings Attributable to Their 
Work  
In 2011, the 54 Senior Medicare Patrol Projects had 5,671 active 
volunteers, a 14-percent increase from 2010.  The projects receive grants 
from the Administration for Community Living (ACL), Administration on 
Aging (AoA), to recruit retired professionals to serve as educators and 
resources in helping beneficiaries to detect and report fraud, waste, and 
abuse in the Medicare program.  Project volunteers conducted 66,303 
one-on-one counseling sessions and 11,109 group education sessions.  
  Page 65  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
 
 
In 2011, 431,128 beneficiaries attended group education sessions, an 
increase from 298,097 in 2010.  Medicare funds recovered that were 
attributable to the projects were $19,283 in 2011.  Total savings to Medicare, 
Medicaid, beneficiaries, and others were $32,941.  Additionally, cost 
avoidance on behalf of the Medicare program, the Medicaid program, 
beneficiaries, and others, totaled $247,850.  
We continue to emphasize that referrals to Medicare contractors or law 
enforcement from beneficiaries who have learned to detect fraud, waste, and 
abuse from the Senior Medicare Patrol Projects cannot be always be tracked.  
Therefore, the projects may not be receiving full credit for savings 
attributable to their work.  In addition, the sentinel effect whereby fraud and 
errors are reduced by Medicare beneficiaries scrutiny of their bills cannot 
Performance Data for the Senior 
be quantified.   
Medicare Patrol Projects:  June 2012 Performance Report
The report had no recommendations.  
.  OEI-02-12-00190.  
June 2012.  Full Text.   
OCotmheprli aHnHceS W-Riethla Etxeedc uRtievvei Oewrdse rs 
HHS High-Dollar Improper Payments   
Incomplete Reporting Hinders Assessment of Risk 
Reducing Improper Payments and Eliminating 
Waste in Federal Programs  HHS did not fully comply 
with Executive Order 13520, 
.  In its FY 2010 quarterly reports on high-dollar 
improper payments, HHS did not report all identified high-dollar improper 
payments made by the Medicare Parts A and B programs.  In addition, for 
Medicare Parts C and D, Head Start, and five State-administered programs, 
we were unable to determine whether the Department reported all 
high-dollar improper payments.  As a result, HHSs quarterly reports were 
incomplete and cannot be used to adequately assess the level of risk of each 
of HHSs programs or to determine the extent of necessary oversight. 
RecommendationsHHS should develop a comprehensive list of 
overpayments for all of its high-priority programs that takes into account 
each potential source of an improper payment and that HcaHnS  bDei da nNaolty Fzeudll yt o 
Cdoetmeprmly iWnei twh hEextehceurt itvhee Orer daerre  1a3n5y2 h0i gWhh-deonl lRaerp iomrtpirnogp FeYr  2p0ay1m0 Henigtsh -fDoro ltlhaer  five 
SImtaptreo-apdemr Pinaiysmteernetds programs that should be reported.  
.  A-02-11-01007.  July 2012.  Full Text.   
  Page 66  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  Non-Federal Audits 
 
 
In this semiannual period, OIGs National External Audit Review Center 
reviewed 1,328 reports covering $2.23 trillion in audited costs.  Federal 
dollars covered by these audits totaled $812.1 billion, about $349 billion of 
which was HHS money. 
Office of Management and Budget (OMB) Circular A-133 establishes audit 
requirements for State and local governments, colleges and universities, and 
nonprofit organizations receiving Federal awards.  Under this circular, 
covered entities must conduct annual organizationwide single audits of all 
Federal money they receive.  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.  The non-Federal 
audit reports reviewed and issued during this reporting period are 
categorized in the following table. 
Table  Non-Federal Audits, October 1, 2011, Through March 31, 2012
 
 
OIG reports issued: 
 
 
Not requiring changes or having minor changes  1,219 
Requiring major changes  101 
Total   
Having significant technical inadequacies  8 
1,328
 
The 1,328 reports included 3,842 recommendations for improving 
management operations.  In addition, these audit reports provided 
information for 40 special memorandums that identified concerns for 
increased monitoring by management. 
  Page 67  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  Recovery Act Retaliation Complaint 
 
Investigations 
 
Recovery Act Retaliation Complaint Investigation  
Section 1553 of the Recovery Act 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.  Section 1553 also requires OIGs to 
include in their semiannual reports to Congress the retaliation complaint 
investigations that they decided not to conduct or continue during the 
reporting period.  During this reporting period, OIG discontinued one 
Recovery Act whistleblower retaliation complaint investigation.  The 
complaint was against a private health care entity in the southeastern United 
States. 
Contract Audits 
 
The National Defense Authorization Act for FY 2008,  845, requires each 
Inspector General appointed under the Inspector General Act of 1978 to 
submit, as part of the semiannual report submitted to Congress pursuant to 
section 5 of such Act, information on final, completed contract audit reports 
issued to the contracting activity containing significant audit findings issued 
during the period covered by the semiannual report concerned.   
We found issues in two NIH contracts that potentially violated the 
Antideficiency Act or the bona fide needs rule.  The Antideficiency Act 
prohibits an agency from obligating or expending funds in advance of or in 
excess of an appropriation unless specifically authorized by law.  Details of 
the audits are provided in the NIH section (NIHs Compliance With 
  Appropriations Funding for National Institute of Allergy and Infectious 
Appropriation Laws). 
Diseases Contract N01-AI-30068 With PPD Development, LP
.  A-03-10-
  Appropriations Funding for National Institute of Allergy and Infectious 
03116.  September 2012.  Full Text 
Diseases Contract HHSN266-2005-00022C With PPD Development, LP
.  
A-03-10-03118.  September 2012.  Full Text. 
   
  Page 68  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
  Legislative and Regulatory Reviews 
 
 
The Inspector General Act requires us 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 
  Semiannual Report to Congress
regulations.    
Our   describes findings and 
recommendations from recently completed reviews, many of which 
  Compendium of Unimplemented Recommendations
focus on existing laws and regulations.   
Our  , which is 
published annually, describes priority findings and recommendations 
from past periods that remain to be implemented, along with pertinent 
  Work Plan
citations of existing laws and regulations.   
Our annual  , which is published at the start of each fiscal year, 
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 us and its operating and 
other 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 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. 
   
  Page 69  HHS Office of Inspector General  Public Health, Human Services, and 
Semiannual Report to Congress  Fall 2012  Other HHS-Related Reviews 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  https://oig.hhs.gov 
 
 
 
 
  Page 70  HHS Office of Inspector General   
Semiannual Report to Congress  Fall 2012  List of Appendixes 
 
 
List of 
Appendixes 
 
 
 
Appendix A  Cost Savings Supported by 
(p. 71)
OIG Recommendations   
Appendix B  Questioned Costs and Funds To Be 
(p. 76)
Put to Better Use   
(p. 84)
Appendix C  Peer Review Results   
Appendix D  Summary of Sanction Authorities 
(p. 86)
 
(p. 89)
Appendix E  Reporting Requirements   
Appendix F  Anti-Kickback StatuteSafe Harbors 
(p. 91)
 
   
   
 
   
    HHS Office of Inspector General   
Semiannual Report to Congress  Fall 2012  List of Appendixes 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  https://oig.hhs.gov 
 
 
 
    HHS Office of Inspector General  Appendix A 
Semiannual Report to Congress  Fall 2012  Cost Savings Supported by OIG Recommendations 
 
 
Appendix A 
Cost Savings Supported  
by OIG Recommendations 
 
After laws involving Department of Health and Human Services (HHS) programs are 
enacted, the Office of Inspector General (OIG) analyzes them to identify provisions 
that were supported by our recommendations and the associated cost savings.  A 
similar process occurs with respect to administrative changes implemented by HHS 
management through regulations or other directives.   
The savings reported in this appendix generally reflect third-party estimates of 
funds made available for better use through reductions in Federal spending, 
deobligation of funds, and/or avoidance of unnecessary expenditures.  To identify 
administrative savings, we use estimates developed by or in consultation with HHS 
operating or staff divisions.   
To identify legislative savings, we use estimates that the Congressional Budget Office 
(CBO) prepares to inform Congress of the potential impact of legislation under 
consideration.  CBO projects the annual increases and/or reductions in Federal 
spending that it expects would result from enacting legislation.  Implemented 
legislative and administrative actions reflect not only OIGs recommendations, but 
also the contributions of others, such as HHS staff and operating divisions and the 
Government Accountability Office (GAO).  Savings estimated for fiscal year (FY) 
2012 that were supported by OIG recommendations totaled $8,548 million 
($8.5 billion).   
Centers for Medicare & Medicaid Services  
OIG Recommendation  Implementing Action  Savings 
(millions) 
Payment Reform for Part B Drugs 
and Biologicals.  
Sections 303 through 305 of the  $2,700 
Reexamine drug  Medicare Prescription Drug, 
reimbursement methodologies  Improvement, and Modernization Act 
based on average wholesale price  of 2003 (MMA) revised the current 
(AWP) with the goal of reducing  payment methodology for Part B-
payments in both Medicare and  covered drugs and biologicals that 
Medicaid.  The recommendation  were not paid on a cost or prospective 
relates to findings in the following  payment basis.  Since January 1, 2005, 
OIG reports:  most drug prices have been based on 
OEI-03-96-00420   the average sales price or competitive 
OEI-03-97-00290   acquisition instead of AWP.  CBO 
OEI-03-00-00310   estimated savings of $2.7 billion for 
OEI-03-97-00293   FY 2012. 
A-06-00-00023    
A-06-01-00053  
A-06-02-00041 
  Page 71  HHS Office of Inspector General  Appendix A 
Semiannual Report to Congress  Fall 2012  Cost Savings Supported by OIG Recommendations 
  OIG Recommendation  Implementing Action  Savings 
  (millions) 
 Medicare Secondary Payer.  
 
Ensure  Section 301 of the MMA clarifies the  $1,200 
sufficient resources and contractor  Secretarys authority to make certain 
training for retroactively  reimbursable conditional payments 
examining paid claims to identify  and to take recovery actions against 
other payer sources and initiating  all responsible entities, including 
recovery action on all related  collection of damages, under Medicare 
overpayments.  The  Secondary Payer provisions.  This 
recommendation related to  section builds on other program 
findings in the following OIG  improvements implemented by the 
reports:  Balanced Budget Act of 1997 (BBA), 
A-02-98-01036   Omnibus Budget Reconciliation Act 
A-04-92-02057   (OBRA) 1993, OBRA 1990, and OBRA 
A-09-89-00162   1989.  CBO estimated savings of 
ACl-i1n0ic-a8l6 D-i6a2g0n0o5st ic Laboratory Tests.  $1.2 billion for FY 2012.  
    
Section 628 of the MMA froze annual  $1,200 
Seek legislation to allow across- updates for FY 2004 through FY 2008.  
the-board adjustments in Medicare  This action builds on prior legislative 
laboratory fee schedules, bringing  actions in the BBA, OBRA 1993, OBRA 
them in line with the prices that  1990, and legislation in 1984 that 
laboratories charge physicians in a  were also responsive to OIGs 
competitive marketplace, and  recommendations to curb excessive 
periodically evaluate the national  clinical laboratory test 
fee schedule levels.  The  reimbursements by Medicare.  
recommendation related to  CBO estimated savings of $1.2 billion 
findings in the following OIG  for FY 2012. 
reports: 
A-09-89-00031  
AM-e0d9i-c9a3re-0 H0o0m56e  Health Payments. 
 
Section 701 of the MMA changed the  $1 billion 
Reduce the Home Health Agency  updates of home health rates from 
(HHA) update factor to account for  fiscal year to calendar year beginning 
the high error rate found in OIGs  in 2004, with the update for the last 
review.  The annual update was  three quarters of 2004 equal to the 
defined as the home health market  market basket increase minus 
basket percentage increase.  The  0.8 percent.  CBO estimated savings of 
recommendation related to  $1billion for FY 2012. 
f indings in OIG report number A-
0Pa4y-9m9e-n0t1s1 f9o4r .D  urable Medical 
Equipment.  
Section 302 of the MMA froze  $900 
Take steps to reduce  payments for certain DME items, 
payments for a variety of durable  including prosthetics and orthotics, 
medical equipment (DME) and  effective January 1, 2004.  CBO 
related supplies.  The  estimated savings of $900 million for 
recommendation related to  FY 2012.     
findings in the following 
OIG reports: 
  Page 72  HHS Office of Inspector General  Appendix A 
Semiannual Report to Congress  Fall 2012  Cost Savings Supported by OIG Recommendations 
  OIG Recommendation  Implementing Action  Savings 
  (millions) 
OEI-03-01-00680  
OEI-03-02-00700  
OEI-07-96-00221  
OEI-03-96-00230  
OEI-03-94-00021  
OEI-06-92-00861  
OPaEyIm-0e6n-9t 2fo-0r 0Se8r6v6ic es Furnished in 
 Ambulatory Surgical Centers.  
Section 626 of the MMA limited the  $500 
Set  ASC update starting April 1, 2004, 
rates that are consistent across  then froze updates for a period 
sites and reflect only the costs  beginning the last quarter of FY 2005, 
necessary for the efficient delivery  effectively reducing the payment 
of health services and establish  advantage to ASCs for those 
parity among ambulatory surgical  procedure codes that are paid at a 
centers (ASC) and outpatient  higher rate  for the surgical center 
departments.  The  compared to the rate for outpatient 
recommendation related to  departments.  Section 626 also 
findings in the following OIG  mandated that CMS implement a new 
reports:   payment system that takes into 
OEI-05-00-00340   account disparities in the costs of 
OEI-09-88-0100 3   procedures performed in ASCs and in 
A-14-98-00400   hospital outpatient departments.  CBO 
A-14-89-00221 estimated savings of $500 million for 
Additional Rebates for Brand-Name  FY 2012. 
Drugs With Multiple Versions.   
Section 2501(d) of the Patient  $300 
  OIG  Protection and Affordable Care Act 
recommended that CMS continue  (Affordable Care Act), as amended by 
to seek legislative authority to  section 1206(a) of the Health Care and 
modify the rebate formula  Education Reconciliation Act of 2010, 
calculation to ensure that  addresses this issue.  CBO estimated 
manufacturers cannot circumvent  savings of $300 million for FY 2012. 
additional rebates by bringing new 
versions of existing brand-name 
drugs to market.  The 
recommendation related to 
findings in OIG report number 
APa-0rt6 B-0 D9r-u0g0s0 A3v3e. rage Sales Price.  
 
Section 112 of the Medicare, Medicaid,  $200 
Adopt an alternate calculation of  and State Childrens Health Insurance 
volume-weighted average sales  Program (SCHIP) Extension Act of 
price (ASP) that is consistent with  2007 establishes a revised method for 
the results set forth in section  calculating volume weighted average 
1847A(b)(3) of the Social Security  sales prices for Medicare Part B drugs 
Act.  The recommendation related  that comports with OIGs 
to findings in OIG report number   recommendation.  CBO estimated 
OEI-03-05-00310.  savings of $200 million for FY 2012. 
   
 
  Page 73  HHS Office of Inspector General  Appendix A 
Semiannual Report to Congress  Fall 2012  Cost Savings Supported by OIG Recommendations 
  OIG Recommendation  Implementing Action  Savings 
  (millions) 
 
 Capped Rental Durable Medical 
Equipment.  
Section 5101 of the DRA revised the  $200 
Eliminate the  payment rules for capped rental DME 
semiannual maintenance payment  to require that ownership of the item 
allowed for capped rental DME,  transfer to the beneficiary after the 
th
pay only for repairs when needed,  13  month and that Medicare pay for 
eliminate the 15-month rental  maintenance services on a cost-
option, and convert rentals to  reimbursement basis.  CBO estimated 
th
purchases after the 13  month.   savings of $200 million for FY 2012. 
The recommendation related to 
 findings in report number  
OMEeId-0ic3a-id0 0T-h0i0rd4 1P0ar. ty Liability.  
Section 6035 of the DRA made several  $210 
Determine whether legislation is  changes to strengthen Medicaids 
needed to explicitly include  third-party liability provisions, 
pharmacy benefit management  including clarification regarding 
companies in the Medicaid  pharmacy benefit managers.  The 
definition of a third party, require  section also includes requiring States 
third parties to match their  to ensure that health insurers provide 
eligibility files with Medicaids  requested coverage data; accept the 
eligibility files, and allow Medicaid  States right of recovery; and agree, 
up to 3 years to recover payments  conditionally, not to deny a claim 
from liable third parties.  The  solely on the basis of date of 
recommendations  related to  submission of the claim when the 
findings in OIG report number  claim is submitted by the State within 
OEI-03-00-00030. a 3-year period beginning on the date 
of service.  CBO estimated 
Medicare Secondary Payer. $210 million in savings for FY 2012.   
 
   Section 111 of the Medicare, Medicaid,  $100 
Implement stronger followup  and SCHIP Extension Act of 2007 
procedures for employers who fail  amended the Medicare secondary 
to respond to data requests,  payer provisions of the Social Security 
exercise civil monetary penalty  Act,  1862(b), to provide for 
(CMP) authority, and seek  mandatory reporting for various 
necessary legislative authority for  categories.  CBO estimated savings of 
mandatory data reporting.  The  $100 million for FY 2012. 
recommendations related to   
findings in the following OIG 
reports:  
A-02-98-01036  
A-02-02-01037  
A-02-02-01038  
A-04-01-07002  
ARe-0b9a-t8es9 -f0o0r 1P0h0ys ician-Administered 
 Drugs.  
Section 6002 of the DRA requires  $15 
Encourage States to take  States to provide for the collection and 
action to collect rebates on  submission of utilization data needed 
  Page 74  HHS Office of Inspector General  Appendix A 
Semiannual Report to Congress  Fall 2012  Cost Savings Supported by OIG Recommendations 
  OIG Recommendation  Implementing Action  Savings 
  (millions) 
physician-administered drugs,  to secure rebates for physician-
especially single-source drugs.   administered drugs and provides that 
States should either use National  the utilization data for single source 
Drug Codes (NDC) instead of  and specified multiple-source 
procedure codes or link procedure  physician-administered drugs be 
codes to NDCs for single-source  submitted using NDC numbers (unless 
drugs.  The recommendations  the Secretary specifies an alternative 
r elated to findings in OIG report  coding system).  CBO estimated 
number OEI-03-02-00660.  savings of $15 million for FY 2012. 
 
Administration for Children and Families 
OIG Recommendation  Implementing Action  Savings 
(millions) 
Triennial Reviews of Child Support 
Orders and Medical Support by 
Parents. Section 7302 of the DRA required  $23 
States to adjust child support orders of 
  Ensure that more periodic  families enrolled in the Temporary 
reviews are initiated and take  Assistance for Needy Families 
action to increase medical support  program every 3 years.  CBO estimated 
by parents.  The recommendations  savings of $16 million for 2012.  
related to findings in OIG report  Section 7307 of the DRA requires 
number OEI-05-98-00100.  States to assess the ability of either or 
  both parents to provide medical 
support for their children.  CBO 
estimated savings of $7 million for 
FY 2012.  The combined projected 
savings for FY 2012 is $23 million.    
   
 
  Page 75  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
 
 
Appendix B 
Questioned Costs and  
Funds To Be Put to Better Use 
 
The following tables summarize the Office of Inspector Generals (OIG) monetary 
recommendations and the Department of Health and Human Services (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 
Questioned costs are those questioned by OIG audits because of an alleged violation 
of a provision of a law, regulation, contract, grant, or other agreement governing the 
expenditure of funds.  Costs are questioned because the expenditure was not 
supported by adequate documentation or because the expenditure was unnecessary 
or unreasonable. 
OIG includes those questioned costs that HHS program officials, in a management 
decision, have agreed should not be charged to thSeem Feiadnenruala Gl Roevpeornrtment, commonly 
referred to as disallowed costs, as part of the expected recoveries in the 
Accomplishment section at the beginning of the  .  Superscripts 
indicate end notes. 
 
 
Table 1 follows.   
  Page 76  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
  Table 1  Audit Reports With Questioned Costs 
 
Number  Dollar Value  Dollar Value 
of  Questioned  Unsupported 
  Reports 
Section 1       
Reports for which no management  191  $726,372,000  $50,411,000 
decisions had been made by the 
1
beginning of the reporting period  
Reports issued during the reporting  147  $404,576,000  $11,215,000 
Total Section 1 
period 
  338  $1,130,948,000  $61,626,000 
Section 2 
 
     
Reports for which management       
decisions were made during the 
2, 3 
reporting period  
  Disallowed costs  185  $440,689,000*  $1,398,000 
Total Section 2 
  Costs not disallowed  7  $40,256,000  $19,247,000 
 
  192  $480,945,000  $20,645,000 
Section 3 
     
     
Reports for which no management  146  $650,003,000  $40,981,000 
decisions had been made by the end of 
the reporting period (Sec. 1 minus 
Sec. 2) 
Section 4  
 
     
Reports for which no management  45  $376,988,000  $29,766,000 
decisions were made within 6 months 
4 
of issuance
 
*  Audit receivables (expected recoveries). 
Audit Reports With Funds  
Recommended To Be Put to Better Use  
Recommendations that funds be put to better use mean 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.   
  Page 77  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
  Table 2  Audit Reports With Funds To Be Put to Better Use 
 
Number  Dollar Value 
of 
  Reports 
Section 1 
   
Reports for which no management decisions had been  16  $727,123,000 
1
made by the beginning of the reporting period  
Total Section 1 
Reports issued during the reporting period  12  $1,434,015,000 
  28  $2,161,138,000 
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  6  $494,591,000 
  Based on proposed legislative action     
Value of recommendations not agreed to by     
Total Section 2 
management  3  $155,000,000 
  9  $649,591,000 
Section 3 
     
   
Reports for which no management decisions had been  19  $1,511,547,000 
2 
made by the end of the reporting period (Sec. 1 minus 
Sec. 2) 
 
End Notes 
Table 1 End Notes 
1
 The opening balance was adjusted upward by $21.6 million because of a 
reevaluation of previously issued recommendations.  
2
 During the period, revisions to previously reported management decisions 
 
included: 
A-01-08-00505, Payments for Ambulance Transportation Provided to 
Beneficiaries in Skilled Nursing Stays Covered Under Medicare Part A in 
Calendar Year 2006; A-01-08-00528, Review of Place-of-Service Coding for 
Physician Services Processed by Medicare Part B Carriers During Calendar Years 
2005 and 2006; A-01-09-00503, Review of Place-of-Service Coding for Physician 
Services Processed by Medicare Part B Carriers During Calendar Year 2007; and 
A-05-08-00022, Review of High-Dollar Payments for Services Processed by 
  Page 78  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
 
 
Wisconsin Physicians Service for the Period January 1, 2004 Through December 
31, 2006.  CMS determined that it could not recoup disallowances totaling 
$48,288,435 associated with these audits because Federal regulations at 42 CFR 
405.980(b) prevented it from reopening claims beyond 4 years after the date of 
  its initial determOinIaGtiso Pna. rtnership Plan  New York State Comptroller Report on 
Adm inistration of the Medicaid Drug Rebate Program
A-02-02-01009, 
.  CMS increased its original 
  disallowance by $St3a.9te m ofil Olioreng toon reflect additional drug rebate payments received.     
 
A-10-10-95482,  .  CMS reduced its original disallowance 
associated with this non-Federal audit by $1,982,061 to reflect the full amount of 
questioned costs that were recovered.     
Not detailed are net reductions to previously reported disallowances totaling 
$1,832,095. 
3 
Included are management decisions to disallow $118.6 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 
(OMB) Circular A-133.  By law, OIG is responsible for 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 45 audits was 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-05-08-00098  REVIEW OF OHIO DEPARTMENT OF JOB AND FAMILY 
SERVICES CLAIMS FOR COSTS REPORTED BY THE 
HAMILTON COUNTY DEPARTMENT OF JOB AND FAMILY 
SERVICES, JAN 2011, $58,987,755 
 
CIN: A-03-07-00560  PA FOSTER CARE MAINTENANCE PAYMENTS - 
PHILADELPHIA -  UNDER $300, MAY 2008, $56,513,439 
 
CIN: A-09-06-00023  REVIEW OF LOS ANGELES COUNTY APPROVAL PROCESS OF 
RELATIVE FOSTER FAMILY HOMES, OCT 2009, $45,520,603 
 
CIN: A-01-02-00006  REVIEW OF RATE SETTING METHODOLOGY FOR MEDICAID 
SCHOOL-BASED HEALTH SERVICES - CT, MAY 2003, 
$32,780,146 
 
CIN: A-03-08-00554  AUDIT OF PENNSYLVANIA TITLE IV-E FOSTER CARE 
ALLEGHENY COUNTY, JAN 2011, $28,307,142 
 
  Page 79  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
 
 
CIN: A-02-08-01009  REVIEW OF MEDICAID ADMINISTRATIVE COSTS CLAIMED 
BY NEW JERSEY FOR STATE FISCAL YEARS 2005 AND 2006, 
MAR 2012, $22,481,421 
 
CIN: A-04-09-03524  REVIEW OF TITLE IV-E ADOPTION ASSISTANCE 
MAINTENANCE PAYMENTS IN GEORGIA FOR THE PERIOD 
OCTOBER 1, 2004 THROUGH SEPTEMBER 30, 2007, MAY 
2011, $22,212,932 
 
CIN: A-01-10-00513  NATIONWIDE REVIEW OF PLACE OF SERVICE CODING FOR 
PHYSICIAN SERVICES PROCESSED BY PART B 
CONTRACTORS FOR CY 2008, SEP 2011, $19,270,689 
 
CIN: A-07-10-06004  REVIEW OF PART D DRUGS PRESCRIBED BY EXCLUDED 
PROVIDERS, DEC 2011, $15,079,608 
 
CIN: A-03-06-00564  PA FOSTER CARE MAINTENANCE PAYMENT - 
PHILADELPHIA -  OVER $300/DAY, DEC 2007, $11,693,989 
 
CIN: A-03-05-00550  AUDIT OF PA FOSTER CARE MAINTENANCE PAYMENTS - 
CASTILLE SAMPLE, SEP 2007, $11,611,822  
 
CIN: A-01-10-00516  NATIONWIDE REVIEW OF PLACE OF SERVICE CODING FOR 
PHYSICIAN SERVICES PROCESSED BY PART B 
CONTRACTORS FOR CY 2009, SEP 2011, $9,498,443 
 
CIN: A-03-09-00019  REVIEW OF MEMBERHEALTH'S 2006 AND 2007 DIRECT 
AND INDIRECT REMUNERATION REPORTS, OCT 2010, 
$9,339,013 
 
CIN: A-04-08-03521  AUDIT OF UNDISTRIBUTABLE CHILD SUPPORT 
COLLECTIONS IN TN FOR THE PERIOD OCTOBER 1, 1998 TO 
DECEMBER 31, 2007, FEB 2009, $5,768,243 
 
CIN: A-01-08-00511  REVIEW OF SEPARATELY BILLED CLINICAL LABORATORY 
SERVICES PROVIDED TO ESRD BENEFICIARIES BY FMCNA, 
MAR 2010, $5,410,712 
 
CIN: A-02-07-01050  REVIEW OF MEDICAID CONTINGENCY FEE CONTRACT 
WITH MAXIMUS  COMMUNITY MENTAL HEALTH 
PROVIDERS  RPT#1 NOV 2011, $5,023,626 
 
CIN: A-04-08-03523  REVIEW OF TITLE IV-E ADOPTION ASSISTANCE 
MAINTENANCE PAYMENTS IN FL FOR THE PERIOD 
OCTOBER 1, 2004 THROUGH SEPTEMBER 30, 2007, MAY 
2009, $4,413,264 
 
  Page 80  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
 
 
CIN: A-01-11-02500  REVIEW OF MASSACHUSETTS' TITLE IV-E ADOPTION 
ASSISTANCE COSTS FOR FEDERAL FISCAL YEARS 2006 
THRU 2008, AUG 2011, $4,242,540 
 
CIN: A-07-11-03163  REVIEW OF CHILDCARE AND DEVELOPMENT TARGETED 
FUNDS IN IOWA, MAR 2012, $2,654,238 
 
CIN: A-06-08-00021  TX SUBRECIPIENT CDC BIOTERRORISM - CORPUS CHRISTI, 
DEC 2011, $1,053,247 
 
CIN: A-07-11-00366  REVIEW OF PENSION SEGMENTATION AT A TERMINATED 
DURABLE MEDICAL EQUIPMENT REGINAL CARRIER 
CONTRACTOR, HEALTHNOW NY, INC, MAR 2012, $946,065 
 
CIN: A-04-10-00067  A MEDICARE CONTRACTORS CLAIMED ADMINISTRATIVE 
COSTS WERE GENERALLY ALLOWABLE, MAR 2012, 
$691,433 
 
CIN: A-01-10-00014  MEDICAID PAYMENTS FOR SCHOOL-BASED HEALTH 
SERVICES IN MANCHESTER, NEW HAMPSHIRE - CYS 2006 - 
2008, JAN 2012, $494,738 
 
CIN: A-01-11-02505  NEON - HEAD START LIMITED SCOPE REVIEW - 
ALLOCATING OF COSTS - ARRA, JAN 2012, $406,434 
 
CIN: A-06-06-00072  REVIEW OF COST FOR TEXAS MEDICAL FOUNDATION 
AUDITEE, MAY 2008, $403,581 
 
CIN: A-01-10-02505  RESULTS OF LIMITED SCOPE REVIEW OF CTE, INC., MAY 
2011, $293,870 
 
CIN: A-05-05-00033  UNDISTRIBUTED CHILD SUPPORT COLLECTIONS - 
MICHIGAN, AUG 2006, $257,859 
 
CIN: A-01-11-02508  REVIEW OF VERMONT'S TITLE IV-E ADMINISTRATIVE AND 
TRAINING COSTS, FEB 2012, $242,233 
 
CIN: A-01-11-02507  REVIEW OF GREAT LAWRENCE COMMUNITY ACTION 
COUNCIL, INC. RECOVERY ACT COSTS CLAIMED, MAR 2012, 
$224,110 
 
CIN: A-07-06-01035  AUDIT OF QUALITY IMPROVEMENT ORGANIZATION - IOWA, 
OCT 2007, $208,974 
 
CIN: A-04-11-03538  HEAD START HIGH RISK GRANTEE - MOBILE COMMUNITY 
ACTION AGENCY, INC., DEC 2011, $147,587 
 
  Page 81  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
 
 
CIN: A-09-09-01007  REVIEW OF IDAHO'S TITLE IV-E ADOPTION ASSISTANCE 
COSTS FOR FEDERAL FISCAL YEARS 2006 THRU 2008, JUL 
2009, $124,046 
 
CIN: A-04-07-01045  COSTS CLAIMED FOR ESRD NETWORK 6 OPERATIONS, AUG 
2009, $116,728 
 
CIN: A-01-10-02503  RESULTS OF LIMITED SCOPE REVIEW AT COMMUNITY 
ACTION COMMITTEE OF DANBURY, INC., APR 2011, $98,806 
 
CIN: A-02-11-02000  DIRECT COST REVIEW - SUNY ALBANY, OCT 2011, $80,439 
 
CIN: A-03-08-00011  REVIEW OF DUPLICATE PAYMENTS TO PHARMACIES FOR 
MEDICARE PART D DRUGS (PDE-DEMO): BARON DRUGS, 
SEP 2009, $79,489 
 
CIN: A-02-06-01023  AUDIT OF QUALITY IMPROVEMENT ORGANIZATION - NEW 
YORK, MAR 2008, $77,358 
 
CIN: A-09-06-00039  MEDICARE INTEGRITY - AUDIT OF QUALITY IMPROVEMENT 
ORGANIZATION - WASHINGTON STATE, FEB 2008, $73,636 
 
CIN: A-06-11-00035  RECIPIENT CAPABILITY AUDIT OF THE GALVESTON 
COUNTY COMMUNITY ACTION COUNCIL, INC., OCT 2011, 
$34,700 
 
CIN: A-04-06-00023  REVIEW OF QUALITY IMPROVEMENT ORGANIZATIONS - 
TENNESSEE, JUL 2008, $30,654 
 
CIN: A-08-03-73541  SOUTH DAKOTA FOUNDATION FOR MEDICAL CARE, JAN 
2003, $28,573 
 
CIN: A-03-10-03110  CONTRACT HHSN267-2007-00014C, OCT 2011, $27,707 
 
CIN: A-08-04-76779  COLORADO FOUNDATION FOR MEDICAL CARE, DEC 2003, 
$18,925 
 
CIN: A-05-06-00043  REVIEW OF OHIO KEPRO, INC., FEB 2008, $11,874 
 
CIN: A-01-11-00005  REVIEW OF MEDICAID HOSPICE PAYMENTS MADE BY 
RHODE ISLAND, MAR 2012, $5,748 
 
 
TOTAL NUMBER OF REPORTS:  45 
 
TOTAL AMOUNT:  $376,988,439 
 
   
  Page 82  HHS Office of Inspector General  Appendix B 
Semiannual Report to Congress  Fall 2012  Questioned Costs, Funds Put to Better Use 
  Table 2 End Notes 
 
1
The opening balance was adjusted downward by $16.5 million because of 
reevaluation of previously issued recommendations.  
2 
Because of administrative delays, some of which were beyond management control, 
resolution of the following five audits was not completed within 6 months of 
issuance of the report.  OIG is working with management to reach resolution on 
these recommendations before the end of the next semiannual reporting period: 
 
CIN: A-01-10-02501  REVIEW OF 83 EARLY HEAD START APPLICANTS UNDER 
THE AMERICAN RECOVERY AND REINVESTMENT ACT, NOV 
2011, $31,000,000 
 
CIN: A-05-05-00033  UNDISTRIBUTED CHILD SUPPORT COLLECTIONS - MI, AUG 
2006, $4,397,133 
 
CIN: A-04-09-03524  REVIEW OF TITLE IV-E ADOPTION ASSISTANCE 
MAINTENANCE PAYMENTS IN GEORGIA FOR THE PERIOD 
OCTOBER 1, 2004 THROUGH SEPTEMBER 30, 2007, MAY 
2011, $2,842,653 
 
CIN: A-05-06-00023  UNDISTRIBUTABLE CHILD SUPPORT COLLECTIONS - MN, 
SEP 2006, $28,240 
 
CIN: A-09-09-01007  REVIEW OF IDAHO'S TITLE IV-E ADOPTION ASSISTANCE 
COSTS FOR FEDERAL FISCAL YEARS 2006 THRU 2008, JUL 
2009, $17,764 
 
TOTAL NUMBER OF REPORTS:  5 
TOTAL AMOUNT:   $38,285,790 
  Page 83  HHS Office of Inspector General  Appendix C 
Semiannual Report to Congress  Fall 2012  Peer Review Results 
 
 
Appendix C 
Peer Review Results 
 
The Inspector General Act of 1978, as amended, requires Offices of Inspector 
General (OIG) 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 the 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).  The required 
information follows. 
Office of Audit Services Peer Review Results 
During this semiannual reporting period, two peer reviews involving the Office of 
Audit SOeArSv ices (OAS) werDea ctoe mpleted.R  e  viewing Office  Office Reviewed 
 
June 2012  Department of  HHS OIG, OAS 
Homeland 
Security 
The system of quality control for the audit organization of HHS OIG in effect for the 
year ending September 30, 2011, 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 
 
May 2012  HHS OIG, OAS  U. S. Environmental 
Protection Agency (EPA) 
The system of quality control for the audit organization of EPA OIG in effect for the 
year ending  September 30, 2011, has been suitably designed and complied with to 
provide EPA 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.  EPA 
OIG received a peer review rating of pass. 
 
 
   
  Page 84  HHS Office of Inspector General  Appendix C 
Semiannual Report to Congress  Fall 2012  Peer Review Results 
  Office of Investigations Peer Review Results  
 
During this semiannual reporting period, the U.S. Postal Service (USPS) Office of 
Inspector General conducted a peer review of HHS OIGs Office of Investigations (OI).  
OI did not conduct a peer review of another OIG during this reporting period.  Listed 
below is information concerning OIs peer review activities during this and prior 
reporting periods.  
OI  Date  Reviewing Office  Office Reviewed 
   
August 2012  USPS-OIG  HHS-OIG, OI 
 
The system of internal safeguards and management procedures for the 
investigative function of HHS-OIG in effect for the year ending September 30, 2012, 
were in full compliance with the quality standards established by CIGIE and the 
Attorney General's guidelines. 
  OI  Date  Reviewing Office  Office Reviewed 
   
July 2011  HHS-OIG, OI  DoD-OIG 
 
The system of internal safeguards and management procedures for the 
investigative function of DoD-OIG in effect through July 2011 were in full 
compliance with the quality standards established by CIGIE and the Attorney 
General's guidelines. 
  OI  Date  Reviewing Office  Office Reviewed 
 
January 2011  HHS-OIG, OI  Department of Housing 
and Urban Development 
 
(HUD) OIG 
 
The system of internal safeguards and management procedures for the 
investigative function of HUD-OIG in effect through February 2011 was in full 
compliance with the quality standards established by CIGIE and the Attorney 
Generals guidelines. 
 
 
  Page 85  HHS Office of Inspector General  Appendix D 
Semiannual Report to Congress  Fall 2012  Sanction Authorities 
 
 
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.   
The Office of Inspector General (OIG) is authorized to exclude individuals and 
entities on several other grounds, including misdemeanors for other health care 
fraud (other than Medicare or Medicaid) or for illegal manufacture, distribution, 
prescription, or dispensing of controlled substances; 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 Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) 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 Department of Health 
and Human Services (HHS) Departmental Appeals Board and Federal district and 
appellate courts regarding the basis for and the length of the exclusion. 
Civil Monetary Penalties Law 
The Civil Monetary Penalties Law (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 
  Page 86  HHS Office of Inspector General  Appendix D 
Semiannual Report to Congress  Fall 2012  Sanction Authorities 
 
 
claim for items and services that the person knows or should know is false or 
fraudulent is subject to a penalty of up to $10,000 for each item or service falsely or 
fraudulently claimed, an assessment of up to three 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 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 Affordable Care Act added more grounds for imposing CMPs.  These include, 
among other 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) for which the Affordable Care Act 
authorizes a penalty of up to $50,000 for each false statement, as well as activities 
relating to fraudulent marketing by managed care organizations, their employees, or 
their agents.  
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 civil monetary penalties (CMP) of up to $25,000 against 
small hospitals (fewer than 100 beds) and up to $50,000 against larger hospitals 
(100 beds or more) for each instance in which the hospital negligently violated any 
of the section 1867 requirements.  In addition, OIG may collect a penalty of up to 
$50,000 from a responsible physician for each negligent violation of any of the 
section 1867 requirements and, in some circumstances, may exclude a responsible 
physician. 
  Page 87  HHS Office of Inspector General  Appendix D 
Semiannual Report to Congress  Fall 2012  Sanction Authorities 
  Anti-Kickback Statute and Civil False Claims Act 
 
Enforcement Authorities 
The Anti-Kickback Statute 
 The 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; 
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 of 
the 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 
False Claims Amendments Act of 1986  
under the Social Security Act,  1128(b)(7) (42 U.S.C.  1320a-7(b)(7)). 
Under the Federal False Claims Amendments 
Act of 1986 (FCA) (31 U.S.C.  37293733), a person or an entity is liable for up to 
treble damages and a penalty between $5,500 and $11,000 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. 
 
 
  Page 88  HHS Office of Inspector General  Appendix E 
Semiannual Report to Congress  Fall 2012  Reporting Requirements 
 
 
Appendix E  
RTheep Ionrstpiencgto Rr eGqeunierreaml Aecnt otsf  1978 
The reporting requirements of the Inspector General Act of 1978, as amended, are 
lisSteedct iino nth  e following tablRe eaqlounirge mweitnht  the location of the requireLodc iantfioornm  ation.     
   
Section 4     
(a)(2)  Review of legislation and regulations  Other HHS-Related Reviews 
Section 5  section   
 
   
(a)(1)  Significant problems, abuses, and  Throughout this report 
deficiencies 
 
(a)(2)  Recommendations with respect to  Throughout this report 
significant problems, abuses, and 
deficiencies  Compendium of 
  Unimplemented 
(a)(3)  Prior significant recommendations on  OReIGco mmendations
which corrective action has not been 
completed   
 
(a)(4)  Matters referred to prosecutive  Legal and Investigative 
authorities  Activities 
 
(a)(5)  Summary of instances in which  None 
information 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 1  Reports With  Appendix B 
Questioned Costs 
 
(a)(9)  Statistical Table 2  Funds  Appendix B 
Recommended To Be Put to Better Use 
 
(a)(10)  Summary of previous audit reports  Appendix B 
without management decisions 
 
(a)(11)  Description and explanation of revised  Appendix B 
  Page 89  HHS Office of Inspector General  Appendix E 
Semiannual Report to Congress  Fall 2012  Reporting Requirements 
  Section  Requirement  Location 
   
management decisions 
 
(a)(12)  Management decisions with which the  None 
Inspector General disagrees 
  Semiannual Report to Congress
(a)(13)  Information required by the Federal  Reported annually in the spring 
Financial Management Improvement  , 
Act of 1996  Other HHS-Related Reviews 
  section 
 
(a)(14)-(16)  Results of peer reviews of HHS-OIG  Appendix C 
conducted by 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. 
 
Other Reporting Requirements 
Section  Requirement  Location 
 
845  Significant contract audits required to  Other HHS-Related Reviews 
be reported pursuant to the National  section 
Defense Authorization Act for fiscal 
year 2008 (P.L. No. 110-181),  845. 
  Semiannual Report
205  Pursuant to the Health Insurance  Reported annually in the fall 
Portability and Accountability Act  .   
(HIPAA) (P.L. No. 104-19F1e)d, er 2a0l 5, the  Appendix F 
IRnesgpisetcetror General is required to solicit   
proposals annually via a 
 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 Reinvestment  Other HHS-Related Reviews 
and Recovery Act of 2010,  1553, OIG  section 
reports to Congress the retaliation 
complaint investigations it decided not 
to conduct or continue during the 
period. 
 
  Page 90  HHS OIG Semiannual Report to Congress  Appendix F   
Fall 2012  Anti-Kickback StatuteSafe Harbors 
 
 
Appendix F 
Anti-Kickback StatuteSafe Harbors 
 
Federal Register
Pursuant to the Health Insurance Portability and Accountability Act (HIPAA),  205, 
the Inspector General is required to solicit proposals annually via a   
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. 
In crafting safe harbors for a criminal statute, it is incumbent upon the Office of 
Inspector General (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 the Department of 
Justice (DOJ), whether it can develop effective regulatory limitations and controls 
not 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 2011 annual solicitation, OIG received the following proposals 
related to safe harbors: 
Proposal  OIG Response 
 
New safe harbor protecting  OIG is not adopting the suggestion to 
remuneration associated with the  promulgate a new safe harbor.  The 
distribution of durable medical  arrangements described are subject to abuse 
equipment by physicians who have  and should be evaluated on a case-by-case basis, 
been certified by the American Board of  such as under the advisory opinion process.  
Sleep Medicine to Medicare patients for  Development of a physician self-referral law 
use in the treatment of obstructive  regulatory exception or waiver is beyond OIGs 
sleep apnea and a corresponding  scope of authority. 
waiver of the application of the 
physician self-referral law.  
 
 
Modify the safe harbor for EHR  OIG is considering whether to extend the sunset 
arrangements to remove the sunset  date. 
provisions and make it a permanent 
safe harbor. 
 
  Page 91 
  HHS OIG Semiannual Report to Congress  Appendix F   
Fall 2012  Anti-Kickback StatuteSafe Harbors 
  Proposal  OIG Response 
 
New safe harbor protecting free  OIG is not adopting this suggestion.  The concept 
continuing medical education programs  of free programs could vary greatly and 
offered by hospitals to physicians.  should be addressed on a case-by-case basis, 
such as under the advisory opinion process. 
 
   
New safe harbor protecting certain  OIG is considering this suggestion. 
motivational incentives offered to 
patients by Federally Qualified Health 
Centers (FQHCs) or FQHC look-alikes to 
either encourage patients to obtain 
medically necessary treatment, reward 
compliance with a treatment plan, or 
reward achievement of treatment-
related goals. 
 
 
Modify the safe harbor for referral  OIG is not adopting this suggestion.  The 
services to allow payments to entities  arrangement described poses a risk of abuse 
serving as referral services to be based  under the anti-kickback statute and should be 
on the volume or value of referrals with  evaluated on a case-by-case basis, such as under 
respect to patients seeking dental  the advisory opinion process. 
services. 
 
Modify the safe harbor for waiver of  OIG is considering modifying this safe harbor or 
beneficiary coinsurance and deductible  proposing a new safe harbor to address the 
amounts to extend protection to  concerns described in this proposal. 
reductions or waivers offered to 
American Indians and Alaskan Natives 
(AI/ANs) eligible for Indian Health 
Service services. 
 
 
New safe harbor protecting exchanges  OIG is considering whether to promulgate a safe 
or transfers of value among Indian  harbor that would address the concerns 
health care providers; transfers of  described in this proposal. 
value from an Indian health care 
provider to an AI/AN eligible for or 
receiving services from that provider; 
arrangements for the exchange, 
transfer, or sharing of medical care 
facilities and resources between an 
Indian health care provider and other 
health care providers; and certain 
transfers of goods, items, services, 
donations, or loans from an individual 
or entity to an Indian health care 
provider. 
 
 
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