Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
 
M A
EDICARE  DVANTAGE 
 
O    I
RGANIZATIONS   DENTIFICATION 
 
P F A  
OF  OTENTIAL  RAUD AND  BUSE
 
 
Daniel R. Levinson  
Inspector General 
February 2012 
OEI-03-10-00310   
   
EXECUTIVE SUMMARY:  MEDICARE ADVANTAGE ORGANIZATIONS 
IDENTIFICATION OF POTENTIAL FRAUD AND ABUSE 
OEI-03-10-00310 
 
WHY WE DID THIS STUDY  
 
The Medicare Advantage (MA) program has become a significant part of Medicare in both 
cost and enrollment.  MA organizations offer plans under Medicare Part C that cover services 
a beneficiary would receive under Medicare Parts A and B; many plans also offer prescription 
drug coverage under Part D.  MA organizations efforts to identify and address potential fraud 
and abuse are crucial to protecting the integrity of the MA program.  Prior to this report, no 
study had examined potential fraud and abuse identified by MA organizations.  CMS requires 
MA organizations to have compliance plans that include measures to detect, correct, and 
prevent fraud, waste, and abuse.  However, CMS does not require MA organizations to report 
the results of their efforts to identify and address potential fraud and abuse incidents. 
 
HOW WE DID THIS STUDY 
 
We collected and reviewed data from 170 of 188 MA organizations that offered plans in 
2009.  These MA organizations represented 4,547 plans nationwide and accounted for  
94 percent of all Medicare beneficiaries enrolled in MA plans in 2009.  We collected and 
summarized the numbers of potential fraud and abuse incidents, inquiries, corrective actions, 
and referrals related to these plans in 2009.  We also categorized the types of potential fraud 
and abuse incidents and corrective actions that MA organizations reported.  
 
WHAT WE FOUND 
 
Nineteen percent of MA organizations did not identify any potential fraud and abuse incidents 
related to their Part C health benefits and Part D drug benefits in 2009.  MA organizations that 
identified potential fraud and abuse in 2009 reported between 1 incident and 1.1 million 
incidents.  Three MA organizations identified 95 percent of the total 1.4 million reported 
incidents.  Differences in the way organizations defined and detected potential fraud and 
abuse may account for some of the variability in the number of incidents they identified.  
While CMS requires MA organizations to initiate inquiries and corrective actions where 
appropriate, not all MA organizations took such steps in response to incidents they identified.  
Overall, MA organizations sent 2,656 referrals of potential fraud and abuse incidents to other 
entities for further investigation in 2009. 
 
WHAT WE RECOMMEND 
 
Our findings indicate that MA organizations lack a common understanding of key fraud and 
abuse program terms and raise questions about whether all MA organizations are 
implementing their programs to detect and address potential fraud and abuse effectively.  
Therefore, we recommend that CMS:  (1) ensure that MA organizations are implementing 
programs to detect, correct, and prevent fraud, waste, and abuse, as required in their 
compliance plans, so that all potential Part C and Part D fraud and abuse incidents are 
   
   
identified; (2) review MA organizations to determine why certain organizations reported 
especially high or low volumes of potential Part C and Part D fraud and abuse incidents and 
inquiries; (3) develop specific guidance for MA organizations on defining potential Part C and 
Part D fraud and abuse incidents and inquiries; (4) require MA organizations to report to CMS 
aggregate data related to their Part C and Part D antifraud, waste, and abuse activities;  
(5) ensure that all MA organizations are responding appropriately to potential fraud and abuse 
incidents; and (6) require MA organizations to refer potential fraud and abuse incidents that 
may warrant further investigation to CMS or other appropriate entities.  CMS concurred with 
our first, third, and fifth recommendations.  CMS did not concur or concurred in part with our 
second, fourth, and sixth recommendations. 
 
 
   
   
TABLE OF CONTENTS 
 
Objectives ....................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................5 
Findings........................................................................................................8 
Nineteen percent of MA organizations did not identify any  
potential fraud and abuse incidents in 2009 .......................................8 
MA organizations that identified fraud and abuse reported  
between 1 incident and 1.1 million incidents; differences in the  
way MA organizations defined and detected potential fraud and 
abuse may account for some of this variability ..................................8 
CMS requires MA organizations to initiate inquiries and  
corrective actions where appropriate, but not all MA organizations 
took such steps in response to incidents they identified ...................10 
MA organizations sent 2,656 referrals of potential Part C and  
Part D fraud and abuse incidents to other entities in 2009 ...............12 
Recommendations ......................................................................................14 
Agency Comments and Office of Inspector General Response .......16 
Appendixes ................................................................................................19 
A:  Potential Fraud and Abuse Incidents, Inquiries, Corrective 
Actions, and Referrals for All Medicare Advantage  
Organizations in 2009 ......................................................................19 
B:  Fraud and Abuse Activities by MA Organization for 2009 ........20 
C:  Types of Potential Part C and Part D Fraud and Abuse  
Identified by Medicare Advantage Organizations in 2009 ...............35 
D:  Types of Corrective Actions Initiated by Medicare  
Advantage Organizations in 2009 ....................................................40 
E:  Referrals to Other Entities for Further Investigation by  
Medicare Advantage Organizations in 2009 ....................................41 
F:  Agency Comments ......................................................................42 
Acknowledgments......................................................................................45 
   
   
OBJECTIVES 
1.  To determine the extent to which Medicare Advantage (MA) 
organizations identify potential fraud and abuse related to their Part C 
and, if applicable, Part D plans. 
2.  To determine the extent to which MA organizations conduct inquiries, 
initiate corrective actions, and make referrals for further investigation 
in response to potential fraud and abuse incidents. 
BACKGROUND 
Medicare beneficiaries generally have the option to receive their benefits 
through the traditional Medicare fee-for-service program or through 
private plans.  Private insurance companies, known as MA organizations, 
contract with the Centers for Medicare & Medicaid Services (CMS) under 
Medicare Part C to provide beneficiaries with private health plan options, 
including managed care plans.  MA plans include coverage for services 
that a beneficiary would receive under Medicare Parts A and B and may 
cover additional services, such as outpatient prescription drugs.   
In 2010, 24 percent of Medicare beneficiaries were enrolled in MA plans.1  
MA program expenses were $115 billion of the total $504 billion in 
Medicare benefit payment expenses in fiscal year 2010.2  For 2011, the 
Medicare Payment Advisory Commission (MedPAC) estimates that CMS 
will spend approximately 10 percent more for beneficiaries enrolled in 
MA plans than CMS would have spent if the beneficiaries had stayed in 
fee-for-service Medicare.3  In its Fiscal Year 2010 Agency Financial 
Report, the Department of Health and Human Services (HHS) reported a 
composite payment error rate of 14.1 percent for the MA program.4  
The MA program has become a significant component of Medicare both in 
cost and enrollment; however, prior to this report, no study had examined 
potential fraud and abuse identified by MA organizations.  This report 
provides details on the results of MA organizations efforts to identify and 
address potential Part C and Part D fraud and abuse.   
 
1 Kaiser Family Foundation (KFF), Medicare Chartbook, Fourth Edition, November 2010.  Accessed at 
http://facts.kff.org/chart.aspx?cb=58&sctn=165&ch=1755 on July 7, 2011. 
2 CMS, CMS Financial Report Fiscal Year 2010, November 2010, p. 5.  Accessed at 
http://www.cms.gov/CFOReport/Downloads/2010_CMS_Financial_Report.pdf on July 7, 2011. 
3 MedPAC, Report to the Congress:  Medicare and the Health Care Delivery System, June 2011, p. 70.  Accessed at 
http://www.medpac.gov/documents/jun11_entirereport.pdf on July 7, 2011. 
4 HHS, FY 2010 Agency Financial Report, November 15, 2010, p. III-18.  Accessed at 
http://www.hhs.gov/afr/2010afr-fullreport.pdf on August 9, 2011.  
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  1 
   
   
Medicare Advantage Program 
The Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 (MMA) made several important changes to Medicare managed care 
and renamed the program Medicare Advantage.5  The MMA also 
established Part D to provide an optional outpatient prescription drug 
benefit for all beneficiaries.6  Many MA organizations offer managed care 
plans that provide beneficiaries with additional coverage for outpatient 
prescription drugs through Part D.  In fact, MA organizations that offer 
plans such as health maintenance organizations (HMO) must offer at least 
one plan that includes Part D prescription drug coverage.7  Therefore, 
many MA organizations operate as both Part C and Part D contractors.  
In 2009, 188 MA organizations offered 4,718 plans across the Nation.  
Sixty-seven percent of the 10.9 million beneficiaries enrolled in MA plans 
in 2009 were in HMOs or local preferred provider organization plans.  In 
the same year, 3,471 of 4,718 MA plans offered Part D prescription drug 
coverage.  Eighty-seven percent of MA beneficiaries were enrolled in 
these MA Prescription Drug (MAPD) plans in 2009.  
Detecting and Deterring Fraud and Abuse 
MA organizations processes and programs for identifying and addressing 
potential fraud and abuse are critical to protecting the integrity of the MA 
program.  CMS requires MA organizations to have compliance plans that 
include measures to detect, correct, and prevent fraud, waste, and abuse.8  
Among other requirements, these compliance plans must include 
procedures for ensuring prompt responses to detected instances of fraud 
and abuse, such as conducting timely inquiries, initiating corrective 
actions (e.g., repayment of overpayments, disciplinary actions against 
responsible employees), and voluntarily self-reporting fraud and abuse to 
CMS.9, 10  In a 2010 Call Letter to MA organizations, CMS announced that 
it planned to assess the effectiveness of MA organizations compliance 
 
5 MMA, P.L. 108-173  201, 42 U.S.C.  1395w-21 note. 
6 MMA, P.L. 108-173  101, Social Security Act, title XVIII, part D, 42 U.S.C.  1395w-101, et seq. 
7 42 CFR  422.4(c); 42 CFR  423.104(f)(3); CMS, Medicare Managed Care Manual, Pub. No. 100-16  
(Rev. 87, June 8, 2007), ch. 4,  10.3. 
8 42 CFR  422.503(b)(4)(vi); 42 CFR  423.504(b)(4)(vi). 
9 42 CFR  422.503(b)(4)(vi)(G); 42 CFR  423.504(b)(4)(vi)(G). 
10 In the preamble to the December 5, 2007, Final Rule, 76 Fed. Reg. 68700, CMS stated that it is committed to 
adopting a mandatory self-reporting requirement.  As of January 2012, CMS had not issued any regulation mandating 
such a requirement. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  2 
   
   
plans during 2010.11  CMS conducted 27 of these fraud and abuse 
compliance plan audits in 2010.12  
Although private managed care options have been available to Medicare 
beneficiaries for many years, CMS has only recently selected contractors 
to oversee and conduct reviews of MA program integrity.  In 2008, CMS 
expanded the Medicare drug integrity contractors (MEDIC) 
responsibilities to include not only Part D but also Part C program 
integrity activities. 
Fraud and Abuse Incidents.  In its Medicare Program Integrity Manual, 
CMS defined fraud as the intentional deception or misrepresentation that 
[an] individual knows to be false or does not believe to be true, and the 
individual makes knowing that the deception could result in some 
unauthorized benefit to himself/herself or some other person.13  CMS 
defined abuse as [b]illing Medicare for services that are not covered or 
are not correctly coded.14  MA organizations may identify potential fraud 
and abuse incidents through internal efforts, such as claim reviews and 
routine audits, or through external sources, such as complaints from 
beneficiaries and referrals from law enforcement agencies.15   
Many different types of fraud and abuse may occur in MA organizations.  
Fraud may be committed by MA organizations themselves, within their 
network of contracted providers, or by beneficiaries.  Examples of fraud 
and abuse within an MA organization include improper marketing and 
enrollment practices, such as misrepresenting covered benefits to 
prospective enrollees; arranging inappropriate payment and financial 
practices with contracted providers; and denying payment for  
Medicare-approved treatments.  Examples of fraud and abuse by 
contracted providers include undertreating patients, placing unreasonable 
restrictions on referrals for specialists or ancillary services  
(e.g., x-ray, imaging, laboratory), and inappropriate prescription 
dispensing.  Examples of fraud and abuse by beneficiaries include 
diverting prescriptions, stockpiling medications, and misrepresenting 
eligibility information to obtain services. 
 
11 CMS, 2010 Call Letter, March 30, 2009, p. 26.  Accessed at 
http://www.cms.gov/PrescriptionDrugCovContra/Downloads/2010CallLetter.pdf on May 12, 2010. 
12 Director, Program Compliance and Oversight Group, CMS, presentation slides (pp. 47), CMS Compliance 
Program Audits:  Medicare Advantage & Prescription Drug Plan Sponsors, July 6, 2011, for the HHS  
Office of Inspector General (OIG). 
13 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, Exhibit 1-Definitions. 
14 Ibid. 
15 42 CFR  422.503(b)(4)(vi)(F); 42 CFR  423.504(b)(4)(vi)(F). 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  3 
   
   
Inquiries.  MA organizations are required to conduct a timely, reasonable 
inquiry when evidence suggests potential fraud and abuse related to 
payment or delivery of items or services under the contract.16 
Corrective Actions and Referrals.  In response to potential fraud and 
abuse, MA organizations are required to carry out appropriate corrective 
actions.17  Corrective actions are measures that an MA organization takes 
to correct a current incident of potential fraud and abuse or to reduce the 
risk that fraud and abuse will occur in the future.  Examples of corrective 
actions are repayment of overpayments; provider education; procedure 
changes; and disciplinary action against responsible individuals, including 
termination from a network.  An organization may perform multiple 
corrective actions in response to an incident of potential fraud and abuse, 
such as requiring a provider to repay an overpayment and subjecting the 
providers future claims to prepayment review. 
MA organizations may refer potential fraud and abuse incidents to a 
number of other entities for further investigation, including CMS, State 
agencies, State insurance commissioners, the Department of  
Justice (DOJ), OIG, and local law enforcement agencies.  CMS also 
recommends that MA organizations have procedures in place to 
voluntarily self-report potential fraud or misconduct related to the MA 
program to CMS or its designee.18 
Fraud and Abuse Reporting.  In its comments on an October 2008 OIG 
report, CMS stated that it believes that it is important for the government 
to have information on potential fraud, waste, and abuse as soon as 
possible ...19  However, CMS does not require MA organizations to 
report information on their identification of potential fraud and abuse 
beyond the requirement to report the number of enrollee grievances related 
to fraud and abuse each quarter.20  Beginning in calendar year 2010,  
MAPD plans may voluntarily report to CMS aggregate data related to 
their Part D antifraud, waste, and abuse activities, including the number of 
incidents of potential fraud and abuse identified, inquiries and corrective 
actions initiated, and potential fraud referrals made to CMS or law 
enforcement authorities.21 
 
16 42 CFR  422.503(b)(4)(vi)(G)(1); 42 CFR  423.504(b)(4)(vi)(G)(1). 
17 42 CFR  422.503(b)(4)(vi)(G)(2); 42 CFR  423.504(b)(4)(vi)(G)(2). 
18 42 CFR  422.503(b)(4)(vi)(G)(3); 42 CFR  423.504(b)(4)(vi)(G)(3). 
19 OIG, Medicare Drug Plan Sponsors Identification of Potential Fraud and Abuse, OEI-03-07-00380,  
October 2008, p. 25.  Accessed at http://oig.hhs.gov/oei/reports/oei-03-07-00380.pdf on July 12, 2011. 
20 CMS, Medicare Part C Plan Reporting Requirements Technical Specification Document, May 7, 2011,  
pp. 3032. 
21 CMS, Medicare Part D Reporting Requirements, January 1, 2010,  XIV.    
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  4 
   
   
Related OIG Work 
In a 2008 report, OIG found that 24 of 86 stand-alone Part D plan 
sponsors did not identify any potential fraud and abuse incidents in the 
first 6 months of 2007.22  OIG also found that not all stand-alone Part D 
plan sponsors that identified potential fraud and abuse incidents conducted 
inquiries, initiated corrective actions, or made referrals for further 
investigation.  Stand-alone Part D plan sponsors are similar to MA 
organizations in that they are private companies that contract with CMS to 
offer health plans to beneficiaries.  Both Part D plan sponsors and MA 
organizations contract with health care providers and facilities to create 
networks to provide health care services to Medicare beneficiaries. 
In a 1998 report regarding CMS contractor fraud units, OIG found 
vulnerabilities in these contractors efforts to identify potential fraud and 
abuse.23  OIG found that the meaning of key words and terms related to 
fraud unit work varied across contractors and that this variation hindered 
CMSs ability to interpret data and measure fraud unit performance. 
METHODOLOGY 
Scope 
We determined the extent to which MA organizations identified and 
addressed potential fraud and abuse in 2009.  During this period, there 
were 188 MA organizations across the country.  We did not include 14 MA 
organizations in our review that had active contracts in 2009 because the 
contracts were no longer active or the organizations were under 
investigation during the time of our data collection.  We excluded data 
received from four MA organizations from our analysis because they 
could not separate incidents related to their MA and MAPD plans from 
incidents related to their other lines of Medicare or commercial business. 
Of the 188 MA organizations in 2009, we reviewed data from 170, which 
provided information on potential fraud and abuse incidents related to 
their MA or MAPD plans.24  These 170 organizations accounted for a total 
of 597 MA contracts, 4,547 MA plans, and 10,581,744 enrollees. 
Data Collection 
CMS.  We downloaded the MA contract enrollment data files from CMSs 
Web site for 2009.  These files contained the number of enrollees for each 
MA contract as well as information about the type of contract.  We used 
these data to identify MA organizations with MA and MAPD contracts in 
 
22 OIG, Medicare Drug Plan Sponsors Identification of Potential Fraud and Abuse, OEI-03-07-00380, October 2008.  
23 OIG, Fiscal Intermediary Fraud Units, OEI-03-97-00350, November 1998. 
24 One of the 170 MA organizations did not operate any MAPD plans in 2009. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  5 
   
   
2009.  We excluded MA organizations that had only cost, demonstration, 
or Program of All-Inclusive Care for the Elderly (PACE) contracts.25, 26, 27  
We downloaded the compliance officer contact information from CMSs 
Health Plan Management System for the remaining MA organizations. 
MA Organizations.  We designed an electronic survey and sent it to MA 
organizations Medicare compliance officers.  We requested that MA 
organizations report how they identified potential fraud and abuse and the 
number of incidents of potential fraud and abuse they identified in 2009 
for all of their MA contracts, including MAPD contracts.  For these 
incidents, we asked MA organizations to report the types of potential fraud 
and abuse identified, the strategies that yielded the potential fraud and 
abuse incidents, the number of inquiries conducted, and the number and 
types of corrective actions initiated.  We also requested the number of 
incidents they referred to CMS, MEDICs, law enforcement authorities, 
and other entities for further investigation.  We received responses from all 
of the MA organizations we surveyed. 
Our electronic survey software assigned an identification number to each 
MA organization in our review.  We use these identification numbers in 
our report to enable the reader to identify information related to the same 
MA organization across the findings and in Appendix B while still 
maintaining the confidentiality of the organization. 
Analysis   
We included survey responses from 170 MA organizations in our analysis.  
We reviewed, coded, and summarized narrative information regarding 
strategies organizations used to identify potential fraud and abuse 
incidents.  We calculated the number of potential Part C and Part D 
incidents identified across MA organizations in 2009.  We grouped 
organizations into six size categories based on the number of enrollees.  
We categorized the types of incidents reported and calculated the total 
number of incidents of each type.  We calculated the total number of 
inquiries conducted in response to incidents.  We also calculated and 
summarized the number and types of corrective actions initiated in 
response to incidents.  Finally, we calculated the total number of incidents 
referred to other entities for further investigation. 
 
25 Medicare payments for cost contracts are based on the reasonable costs of providing services to enrollees.   
26 Demonstration contracts test improvements in Medicare coverage, payment, and quality of care.  These contracts 
usually operate for a limited time, for a specific group of people, and/or are offered only in specific areas. 
27 PACE is a benefit that features a comprehensive service delivery system and integrated Medicare and Medicaid 
financing. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  6 
   
   
Limitations 
The information we received from MA organizations was self-reported.  
We did not collect from MA organizations any documentation relating to 
the potential fraud and abuse incidents, inquiries, corrective actions, or 
referrals they reported to verify their responses to our survey. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  7 
   
   
FINDINGS 
Nineteen percent of MA organizations did not identify 
any potential fraud and abuse incidents in 2009 
All of the MA organizations in our review reported having compliance 
plans in place as required by CMS.  These compliance plans must include 
a program to detect, correct, and prevent fraud, waste, and abuse.28  
However, the efforts of 19 percent of MA organizations (33 of 170) to 
detect fraud and abuse did not yield any potential incidents related to both 
their Part C health benefits and Part D drug benefits in 2009. 
An additional 24 organizations identified Part C incidents but no Part D 
incidents.  Another 11 MA organizations identified Part D incidents but no 
Part C incidents. 
Enrollment in these 68 MA organizations totaled 571,623 beneficiaries 
and ranged from an organization with 114 members to an organization 
with 55,876 members.  Fourteen of the sixty-eight organizations 
accounted for fewer than 1,000 enrollees each. 
MA organizations that identified fraud and abuse 
reported between 1 incident and 1.1 million incidents; 
differences in the way MA organizations defined and 
detected potential fraud and abuse may account for 
some of this variability 
One hundred thirty-seven MA organizations identified a total of  
1,431,683 incidents of potential Part C and Part D fraud and abuse  
in 2009.  The volume of incidents identified varied significantly.   
Fourteen organizations each identified more than 1,000 incidents.  In 
contrast, 41 organizations each identified fewer than 10 incidents in 2009.  
Appendix A provides the total numbers of incidents identified across MA 
organizations.  Appendix B provides the numbers of incidents reported by 
individual MA organizations. 
Three MA organizations identified 95 percent of all potential 
fraud and abuse incidents in 2009 
Three organizations were responsible for 1,358,184, or 95 percent, of all 
potential Part C and Part D incidents.  The majority of these were related 
to two MA organizations Part C health benefits.  Table 1 provides specific 
information on the numbers of MA enrollees, potential Part C incidents, 
and potential Part D incidents for each of these three MA organizations. 
 
28 42 CFR  422.503(b)(4)(vi); 42 CFR  423.504(b)(4)(vi). 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  8 
   
   
Table 1:  Three MA Organizations Were Responsible for 95 Percent of Potential 
Fraud and Abuse Incidents Identified in 2009 
Number of  Number of  Total Number  Percentage of 
MA  Potential   Potential   of Potential  All Incidents 
Number of MA 
Organization  Part C Fraud  Part D Fraud  Fraud and  Identified in 
Enrollees 
Identifier  and Abuse  and Abuse  Abuse  2009 
Incidents  Incidents  Incidents   (1,431,683) 
178  Over 250,000   1,010,233  100,909  1,111,142  78% 
34  20,000 to 49,999  200,111  2,377  202,488  14% 
112  5,000 to 19,999   0  44,554  44,554  3% 
     Total  1,210,344  147,840  1,358,184  95% 
     Source:  OIG analysis of MA organizations survey responses and CMS enrollment data for 2009. 
Ninety-five percent of the incidents (1,290,656 of 1,358,184) identified by 
these 3 MA organizations were associated with 3 types of potential fraud 
and abuse:  improper coding (1,153,996 incidents), inappropriate billing 
for prescriptions (104,550), and inappropriate prescription dispensing 
(32,110).  Appendix C contains a complete list of the number of incidents 
associated with each type of potential fraud and abuse reported by MA 
organizations for both Part C and Part D. 
The remaining 134 MA organizations identified 73,499 potential 
Part C and Part D fraud and abuse incidents in 2009 
Excluding the incidents identified by the 3 MA organizations described 
above, 134 organizations identified a total of 73,499 potential fraud and 
abuse incidents in 2009.  Eighty-three percent of these were related to Part 
C.  Specifically, 123 organizations identified 61,188 potential Part C fraud 
and abuse incidents, and 108 organizations identified 12,311 potential  
Part D fraud and abuse incidents.   
These 134 organizations enrolled 9.9 million beneficiaries in 2009.  All 
MA organizations with more than 50,000 enrollees identified at least  
1 incident of potential fraud and abuse, yet some smaller MA 
organizations identified more incidents than their counterparts with larger 
enrollment.  For example, an organization with more than  
250,000 enrollees identified 37 potential Part C fraud and abuse incidents 
and 8 potential Part D incidents.  Another organization, which had fewer 
than 5,000 enrollees, identified 7,787 potential Part C fraud and abuse 
incidents and 154 potential Part D incidents. 
These 134 MA organizations reported 32 different types of Part C 
incidents in 2009.  The most common type of incident related to their   
Part C health benefits was improper coding of services.  MA organizations 
identified 25 different types of potential fraud and abuse incidents related 
to Part D; inappropriate prescription dispensing was the most common 
type. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  9 
   
   
Differences in the way MA organizations defined and detected 
potential fraud and abuse may account in part for the wide 
variation in the number of incidents identified 
The number of potential fraud and abuse incidents reported by MA 
organizations may depend on how broadly they define potential fraud and 
abuse.  MA organization 178 identified the highest number of incidents  
in 2009.  This organization reported that it took an expansive view of 
potential fraud and abuse.  It defined a potential fraud and abuse incident 
as any claim line flagged by its prepayment edit system.  MA  
organization 34 also identified a high number of incidents and reported 
that it used claims editing and auditing software to screen claims for 
potential improper coding.  This organization considered all claims 
identified by this software as potential fraud and abuse incidents.  Other 
organizations also described using claims monitoring, prepayment 
reviews, and software packages specifically designed to screen claims to 
identify potential fraud and abuse.  However, some of these MA 
organizations reported low numbers of incidents.  Therefore, it would 
seem that not all MA organizations defined every item identified by these 
detection methods as a potential fraud and abuse incident. 
Some MA organizations did not report using any proactive methods  
(e.g., claims monitoring) to identify their potential Part C and/or Part D 
fraud and abuse incidents.  Many organizations indicated that they used 
hotlines and other reporting and complaint mechanisms, along with other 
types of fraud and abuse detection methods, to identify potential fraud and 
abuse.  However, some organizations reported relying solely on hotlines 
and complaints to identify potential Part C and/or Part D incidents.  These 
organizations identified 12 or fewer incidents in 2009. 
CMS requires MA organizations to initiate inquiries 
and corrective actions where appropriate, but not all 
MA organizations took such steps in response to 
incidents they identified 
CMS requires MA organizations to conduct a timely, reasonable inquiry 
when evidence suggests potential fraud or abuse related to payment or 
delivery of items or services under their contracts.29  In addition, CMS 
requires MA organizations to carry out appropriate corrective actions in 
response to potential fraud and abuse.30  However, 11 organizations did 
not initiate any inquiries in response to 14,681 potential Part C fraud and 
abuse incidents they identified in 2009; 19 organizations did not initiate 
 
29 42 CFR  422.503(b)(4)(vi)(G)(1). 
30 42 CFR  422.503(b)(4)(vi)(G)(2). 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  10 
   
   
any inquiries in response to 3,387 Part D incidents.  Furthermore,  
25 organizations did not initiate any corrective actions in response to 
5,300 Part C incidents they identified in 2009, and 39 organizations did 
not initiate any corrective actions for 2,979 Part D incidents.   
Appendix A provides the total numbers of potential Part C and Part D 
fraud and abuse incidents, inquiries, and corrective actions reported by 
MA organizations. 
MA organizations reported initiating 1.2 million inquiries; 
however, MA organizations had different interpretations of 
what constitutes an inquiry 
MA organizations initiated a total of 1,188,269 inquiries in response  
to the potential Part C and Part D fraud and abuse incidents they  
identified in 2009.  MA organizations each initiated between  
1 and 1,111,142 inquiries. 
Differences in the ways some MA organizations defined and tracked 
inquiries may account for some of the variation in the number of inquiries 
they reported.  For example, MA organization 178 reported that it initiated 
the same number of inquiries as the number of potential fraud and abuse 
incidents it identified.  Specifically, this organization reported conducting 
1,010,233 Part C inquiries and 100,909 Part D inquiries.  This 
organization defined potential fraud and abuse incidents as all claim lines 
caught by its prepayment edit system and considered the automated 
remittance advice letters generated by the prepayment system to be 
inquiries.31 
Although we did not ask all MA organizations to describe how they 
defined inquiries, we asked for descriptions from seven organizations that 
reported conducting more inquiries than the total number of potential 
fraud and abuse incidents they identified.  One of these defined the 
number of inquiries it conducted as the number of internal staff members 
who investigated a particular potential fraud and abuse incident.  Another 
organization defined inquiries as the number of unique contacts that 
[their] organization made during the investigation of each incident.  A 
third organization reported that some of the potential fraud and abuse 
incidents it identified were associated with more than one type of 
suspicious activity which resulted in more than one inquiry.  This 
organization defined an inquiry as an investigative action. 
 
31 A remittance advice letter is a notice of payments and adjustments sent to providers of health care services.  It 
explains the payments and adjustments made on the providers processed claims. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  11 
   
   
MA organizations reported initiating 1.1 million corrective 
actions; 1 organization represented 98 percent of these  
MA organizations reported initiating a total of 1,134,063 corrective 
actions in response to the potential fraud and abuse incidents they 
identified in 2009.  Ninety-eight percent of these corrective actions were 
initiated by MA organization 178, which defined the prepayment claim 
edits it used to identify potential fraud and abuse as corrective actions.  
This organization reported that it initiated 1,111,140 corrective actions in 
response to the 1,111,142 potential Part C and Part D incidents it 
identified.  Another 25 organizations initiated at least as many corrective 
actions as the number of incidents they reported in 2009.  In contrast,  
6 of the organizations that identified more than 1,000 potential fraud and 
abuse incidents initiated fewer than 8 corrective actions for every  
100 incidents they identified.  For example, MA organization 36 initiated  
2 corrective actions in response to 12,512 incidents.  Appendix D provides 
a complete list of the types of corrective actions initiated by MA 
organizations. 
MA organizations sent 2,656 referrals of potential  
Part C and Part D fraud and abuse incidents to other 
entities in 2009 
MA organizations sent a total of 2,656 referrals of potential Part C and 
Part D fraud and abuse incidents to more than 13 different entities for 
further investigation in 2009.  MA organizations may send the same 
incident to more than one entity.  For example, one organization referred 
the same Part C incident to both DOJ and State and local law enforcement 
authorities.  Appendix E provides the numbers of Part C and Part D 
referrals MA organizations sent to other entities in 2009. 
Two of the three MA organizations that reported the highest 
numbers of incidents made only 40 referrals in 2009 
Although MA organization 178 conducted over 1 million inquiries and 
initiated over 1 million corrective actions, it referred only 39 of the 
1,111,142 potential fraud and abuse incidents it identified to other entities 
for further investigation.  All but one of these referrals were directed to 
MEDICs.  MA organization 34 referred only 1 of the 202,488 incidents it 
identified to a MEDIC for further investigation.  MA organization 112 did 
not refer any of the 44,554 Part D incidents it identified in 2009. 
The remaining MA organizations made 2,616 referrals of 
potential Part C and Part D incidents in 2009 
Seventy MA organizations sent a total of 1,689 referrals of potential  
Part C fraud and abuse incidents to other entities for further investigation 
in 2009.  MA organizations referred these Part C incidents to more than  
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  12 
   
   
12 different entities, including State insurance commissioners, OIG, and 
MEDICs.  In contrast, 53 organizations that identified 35,779 potential 
Part C incidents in 2009 did not refer any incidents to other entities.   
Fifty-six MA organizations made 927 referrals of potential Part D fraud 
and abuse incidents they identified in 2009 to other entities for further 
investigation.  Most referred incidents were directed to MEDICs, DOJ, 
and State and local law enforcement agencies.  Fifteen of these 
organizations each referred just one potential Part D incident.   
Fifty-two MA organizations identified 7,732 Part D incidents in 2009, but 
did not make any referrals for further investigation. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  13 
   
   
RECOMMENDATIONS 
MA organizations efforts to identify and address potential fraud and abuse 
are crucial to protecting the integrity of the MA program.  These 
organizations are required to have compliance plans in place that include 
programs to detect, correct, and prevent fraudulent and abusive activity.  
CMS, however, does not require MA organizations to report, nor does it 
routinely review, the results of organizations efforts to identify and 
respond to potential fraud and abuse.  Our review reveals that, in 2009, the 
efforts of 19 percent of MA organizations did not yield any potential  
Part C and Part D fraud and abuse incidents.  Another 21 percent of 
organizations did not identify potential fraud and abuse in either Part C or 
Part D.  These findings build upon the results of a prior OIG review that 
revealed that more than one-quarter of stand-alone Part D plan sponsors 
did not identify any potential fraud and abuse in 2007. 
The volume of potential fraud and abuse incidents identified by MA 
organizations varied significantly.  Eight organizations identified just  
1 incident in 2009, and 1 organization identified over 1 million potential 
Part C and Part D fraud and abuse incidents.  Also, not all organizations 
that identified incidents conducted inquiries, initiated corrective actions, or 
referred incidents to outside entities for further investigation. 
These findings indicate that not all MA organizations have a common 
understanding of key fraud and abuse program terms, including 
incident, inquiry, and corrective action.  In a 1998 report, OIG 
identified similar issues relating to Medicare benefit integrity contractors 
definitions of key fraud and abuse terms.  OIG found that variation in the 
meaning of key words and terms across these contractors hindered CMSs 
ability to interpret their data and measure their performance. 
In addition, our findings raise questions about whether all MA 
organizations are implementing their programs to detect and address 
potential fraud and abuse effectively. 
Therefore, we recommend that CMS: 
Ensure that MA organizations are implementing programs to 
detect, correct, and prevent fraud, waste, and abuse, as 
required in their compliance plans, so that all potential Part C 
and Part D fraud and abuse incidents are identified 
We recommend that CMS focus on the 33 MA organizations that did not 
identify any potential fraud and abuse incidents related to their Part C 
health benefits and Part D drug benefits in 2009 and the 35 MA 
organizations that identified incidents related only to Part C or only to  
Part D. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  14 
   
   
Review MA organizations to determine why certain 
organizations reported especially high or low volumes of 
potential Part C and Part D fraud and abuse incidents and 
inquiries   
From this review, CMS would be able to determine the extent to which the 
extreme variation in reporting is due to (1) the lack of a common 
understanding across MA organizations of key fraud and abuse terms; or 
(2) the quality of their programs to detect, correct, and prevent fraud, 
waste, and abuse. 
Develop specific guidance for MA organizations on defining 
potential Part C and Part D fraud and abuse incidents and 
inquiries  
CMS manuals and documents provide basic definitions of fraud and abuse 
incidents and inquiries.  However, our review indicates that some MA 
organizations defined potential fraud and abuse incidents and inquiries 
quite differently.  These differences may have contributed to the wide 
variation in the volume of incidents and inquiries MA organizations 
reported for 2009.  Clear and specific guidance regarding fraud and abuse 
terms would promote common understanding across MA organizations 
and help CMS to ensure comparability of fraud and abuse information 
across MA organizations. 
Require MA organizations to report to CMS aggregate data 
related to their Part C and Part D antifraud, waste, and abuse 
activities 
MA organizations have had the option to voluntarily report aggregate 
fraud and abuse activity data to CMS for their Part D plans since 2010.  
CMS should require MA organizations to report this information for both 
their Part C and Part D plans.  CMS should use these data to target audits 
and evaluate the effectiveness of MA organizations fraud, waste, and 
abuse programs. 
Ensure that all MA organizations are responding appropriately 
to potential fraud and abuse incidents   
As required by 42 CFR  422.503(b)(4)(vi)(G), MA organizations must 
conduct timely, reasonable inquiries and take appropriate corrective 
actions in response to evidence of potential fraud and abuse.  CMS may 
want to focus on the MA organizations that identified potential fraud and 
abuse incidents in 2009, but did not initiate any inquiries or take any 
corrective actions. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  15 
   
   
Require MA organizations to refer potential fraud and abuse 
incidents that may warrant further investigation to CMS or 
other appropriate entities   
Current regulations stipulate only that MA organizations should have 
procedures to voluntarily self-report potential fraud or misconduct related 
to the MA program to CMS or its designee. 
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
In its comments on the draft report, CMS stated that MA organizations 
efforts to identify and address potential fraud and abuse are crucial to 
protecting the integrity of the MA program.  It concurred with our first 
recommendation, to ensure that MA organizations are implementing their 
programs to identify potential fraud and abuse.  CMS stated that it 
conducted 33 compliance plan audits in 2010 and that its annual audit 
evaluation process uses various data to identify MA organizations that 
present risks to the Part C and Part D programs.  In addition, CMS noted 
that it plans to provide an updated manual chapter to MA organizations 
with instructions and guidance on how to implement a program to detect, 
correct, identify, and prevent fraud, waste, and abuse. 
CMS did not concur with our second recommendation, to review MA 
organizations to determine why certain organizations reported especially 
high or low volumes of potential fraud and abuse.  CMS stated that, based 
on enhancements it has made to compliance plan audits and the age of the 
data used in OIGs report, it does not believe it is necessary to contact the 
MA organizations identified in the OIG study.   
CMS performed audits of 27 MA organizations compliance plans for the 
period 2006 through 2010.  OIG agrees that these audits can provide 
valuable information about the performance of the individual 
organizations selected for review.  However, the audits focused on a small 
number of organizations and have not provided CMS with the information 
it needs to identify trends and aberrancies and compare organizations 
antifraud efforts across the MA program.  Until CMS requires MA 
reporting of both Part C and Part D antifraud activities, the 2009 data 
collected by OIG are the only comprehensive source of this information 
for MA organizations.  Therefore, OIG continues to recommend that CMS 
review the data and determine the reasons for such significant differences 
in the volume of fraud identification across MA organizations.  This 
analysis could help CMS to determine whether differences are related to 
the quality of organizations antifraud programs or to the lack of common 
understanding across organizations of key fraud and abuse terms.   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  16 
   
   
CMS concurred with our third recommendation, to develop specific 
guidance for MA organizations on defining potential fraud and abuse 
incidents and inquiries.  CMS noted that it is developing a Part C and  
Part D fraud handbook for sponsoring organizations about detecting and 
preventing fraud, to be available in fall 2012.  CMS further stated that it 
has added more detailed regulatory requirements for the seven compliance 
program elements, effective January 1, 2011, including a specific 
requirement that MA organizations have an effective compliance 
program. 
CMS concurred in part with our fourth recommendation, that it require 
MA organizations to report aggregate data related to their Part C and  
Part D antifraud, waste, and abuse activities.  CMS stated that compliance 
program audit results may provide an indication of MA organizations 
overall performance and allow CMS to target guidance and education.  
CMS also stated that it will explore the option of placing an additional 
burden on MA organizations by requiring them to report aggregate data on 
their antifraud activities.   
While CMSs current audit approach is made up of assessments of the 
performance of individual MA organizations, we continue to recommend 
that CMS adopt a broader approach to review MA organizations antifraud 
efforts.  To assess the MA program as a whole, CMS must collect, 
examine, and compare data from all MA organizations on fraud and abuse 
incidents, inquiries, corrective actions, and referrals.  Requiring all MA 
organizations to report data on their antifraud activities would enable CMS 
to explore the data in detail to identify potentially aberrant organizations 
and thereby enhance its ability to target audits and evaluate the 
effectiveness of antifraud activities across the entire MA program. 
CMS concurred with our fifth recommendation, to ensure that all MA 
organizations respond appropriately to potential fraud and abuse.  CMS 
stated that, in addition to publishing the updated manual chapter, it will 
consider developing outreach and education based on lessons it has 
learned from completed audits to improve organizations performance in 
responding to potential fraud and abuse incidents. 
CMS concurred in part with our sixth recommendation, to require MA 
organizations to refer potential fraud and abuse incidents that warrant 
further investigation to CMS or other entities.  CMS stated that it does not 
have the regulatory authority to require MA organizations to self-report 
fraud and abuse incidents.  However, CMS noted that it will explore this 
option and continue to encourage MA organizations through guidance and 
education to voluntarily self-report fraud and abuse incidents.   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  17 
   
   
OIG acknowledges that current regulations do not require MA 
organizations to self-report potential fraud and abuse incidents.  However, 
CMS has the authority to amend the regulations to require that MA 
organizations report potential fraud and abuse incidents that warrant 
further investigation to appropriate entities.  We also note that CMS stated 
in the preamble to a December 5, 2007, Final Rule that although we have 
decided not to finalize the mandatory self-reporting provisions that we 
proposed, CMS remains committed to adopting a mandatory self-reporting 
requirement. 
The full text of CMSs comments is provided in Appendix F.
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  18 
   
   
APPENDIX A 
Potential Fraud and Abuse Incidents, Inquiries, Corrective Actions, and Referrals for 
All Medicare Advantage Organizations in 2009 
Table A-1:  Potential Fraud and Abuse Incidents and Inquiries Reported by 
Medicare Advantage Organizations in 2009 
 
Top Three MA Organizations  Remaining MA Organizations 
Potential  Potential 
Fraud and  Number of  Fraud and  Number of 
Ratio of  Ratio of 
Abuse  Inquiries  Abuse  Inquiries 
  Inquiries to  Inquiries to 
Incidents  Conducted  Incidents  Conducted in 
Incidents  Incidents 
Identified in  in 2009  Identified in  2009 
2009  2009 
Part C  1,210,344  1,010,234  83%  61,188  24,928  41% 
Part D  147,840  145,830  99%  12,311  7,277  59% 
      Total  1,358,184  1,156,064  85%  73,499  32,205  44% 
Source:  Office of Inspector General (OIG) analysis of Medicare Advantage (MA) organizations survey responses. 
Table A-2:  Potential Fraud and Abuse Incidents and Corrective Actions Reported 
by MA Organizations in 2009 
 
Top Three MA Organizations  Remaining MA Organizations 
Potential  Potential 
Number of  Number of 
Fraud and  Ratio of  Fraud and  Ratio of 
Corrective  Corrective 
Abuse  Corrective  Abuse  Corrective 
  Actions  Actions 
Incidents  Actions to  Incidents  Actions to 
Initiated in  Initiated in 
Identified in  Incidents  Identified in  Incidents 
2009  2009 
2009  2009 
Part C  1,210,344  1,010,235  83%  61,188  15,248  25% 
Part D  147,840  103,769  70%  12,311  4,811  39% 
      Total  1,358,184  1,114,004  82%  73,499  20,059  27% 
Source:  OIG analysis of MA organizations survey responses. 
Table A-3:  Potential Fraud and Abuse Incidents and Referrals to Other Entities 
Reported by MA Organizations in 2009 
 
Top Three MA Organizations  Remaining MA Organizations 
Potential  Potential 
Fraud and  Ratio of  Fraud and  Ratio of 
Number of  Number of 
Abuse  Referrals  Abuse  Referrals 
  Referrals  Referrals Sent 
Incidents  Sent to  Incidents  Sent to 
Sent in 2009  in 2009 
Identified in  Incidents  Identified in  Incidents 
2009  2009 
Part C  1,210,344  39  <.01%  61,188  1,689  3% 
Part D  147,840  1  <.01%  12,311  927  8% 
      Total  1,358,184  40  <.01%  73,499  2,616  4% 
Source:  OIG analysis of MA organizations survey responses. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  19 
   
   
APPENDIX B 
Fraud and Abuse Activities by MA Organization for 2009 
This table provides the numbers of potential fraud and abuse incidents identified, inquiries 
conducted, corrective actions initiated, and incidents referred for each of the 170 Medicare 
Advantage (MA) organizations in our review.  The data are sorted by the total number of 
incidents each MA organization identified. 
 
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  1,010,233  1,010,233  1,010,233  38 
178  Over 250,000  Part D  100,909  100,909  100,907  1 
Subtotal  1,111,142  1,111,142  1,111,140  39 
Part C  200,111  1  2  1 
34  20,000 to 49,999  Part D  2,377  377  128  0 
Subtotal  202,488  378  130  1 
Part C  0  *  *  * 
112  5,000 to 19,999  Part D  44,554  44,544  2,734  0 
Subtotal  44,554  44,544  2,734  0 
Part C  14,558  0  7,047  0 
74  20,000 to 49,999  Part D  866  866  890  0 
Subtotal  15,424  866  7,937  0 
Part C  10,675  2  2  0 
36  20,000 to 49,999  Part D  1,837  0  0  0 
Subtotal  12,512  2  2  0 
Part C  7,478  7,381  1,898  91 
174  Over 250,000  Part D  712  631  102  45 
Subtotal  8,190  8,012  2,000  136 
Part C  7,787  11  6  1 
57  1,000 to 4,999  Part D  154  0  0  0 
Subtotal  7,941  11  6  1 
Part C  5,123  5,123  0  0 
14  5,000 to 19,999  Part D  25  25  0  1 
Subtotal  5,148  5,148  0  1 
continued on next page 
 
 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  20 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  3,053  669  669  0 
58  1,000 to 4,999  Part D  26  26  26  0 
Subtotal  3,079  695  695  0 
Part C  2,251  2,251  1,236  432 
169  Over 250,000  Part D  303  303  131  266 
Subtotal  2,554  2,554  1,367  698 
Part C  2,154  2,154  794  20 
33  Over 250,000  Part D  51  51  44  6 
Subtotal  2,205  2,205  838  26 
Part C  9  9  14  1 
143  5,000 to 19,999  Part D  2,040  2,040  2,043  1 
Subtotal  2,049  2,049  2,057  2 
Part C  42  32  20  1 
61  5,000 to 19,999  Part D  1,532  101  101  0 
Subtotal  1,574  133  121  1 
Part C  1,360  1,339  49  1 
62  50,000 to 250,000  Part D  75  75  0  0 
Subtotal  1,435  1,414  49  1 
Part C  843  843  843  0 
24  5,000 to 19,999  Part D  1  1  0  0 
Subtotal  844  844  843  0 
Part C  123  123  102  0 
98  20,000 to 49,999  Part D  714  714  247  0 
Subtotal  837  837  349  0 
Part C  13  13  3  7 
70  5,000 to 19,999  Part D  799  0  88  0 
Subtotal  812  13  91  7 
Part C  508  508  10  1 
7  20,000 to 49,999  Part D  226  0  0  0 
Subtotal  734  508  10  1 
Part C  438  438  80  4 
119  50,000 to 250,000  Part D  289  289  13  2 
Subtotal  727  727  93  6 
Part C  438  438  11  0 
87  Over 250,000  Part D  98  98  0  17 
Subtotal  536  536  11  17 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  21 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  1  1  0  0 
81  5,000 to 19,999  Part D  374  374  305  0 
Subtotal  375  375  305  0 
Part C  310  310  127  78 
176  50,000 to 250,000  Part D  54  54  30  14 
Subtotal  364  364  157  92 
Part C  263  263  86  0 
95  50,000 to 250,000  Part D  66  66  1  22 
Subtotal  329  329  87  22 
Part C  291  291  267  1 
76  Over 250,000  Part D  35  35  28  3 
Subtotal  326  326  295  4 
Part C  270  136  5  50 
148  50,000 to 250,000  Part D  1  1  0  1 
Subtotal  271  137  5  51 
Part C  213  213  111  5 
16  50,000 to 250,000  Part D  49  159  49  3 
Subtotal  262  372  160  8 
Part C  186  179  179  119 
20  20,000 to 49,999  Part D  21  21  26  18 
Subtotal  207  200  205  137 
Part C  69  69  15  0 
21  1,000 to 4,999  Part D  104  104  25  0 
Subtotal  173  173  40  0 
Part C  8  20  18  1 
72  1,000 to 4,999  Part D  163  163  26  0 
Subtotal  171  183  44  1 
Part C  16  16  1  0 
25  5,000 to 19,999  Part D  153  0  0  0 
Subtotal  169  16  1  0 
Part C  87  87  71  3 
47  50,000 to 250,000  Part D  79  79  22  3 
Subtotal  166  166  93  6 
Part C  140  123  3  0 
40  1,000 to 4,999  Part D  24  0  0  0 
Subtotal  164  123  3  0 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  22 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  155  74  29  20 
173  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  155  74  29  20 
Part C  143  166  76  7 
51  50,000 to 250,000  Part D  1  1  0  0 
Subtotal  144  167  76  7 
Part C  29  15  0  7 
78  50,000 to 250,000  Part D  107  39  0  22 
Subtotal  136  54  0  29 
Part C  121  6  2  1 
123  5,000 to 19,999  Part D  9  0  9  0 
Subtotal  130  6  11  1 
Part C  124  109  23  1 
144  1,000 to 4,999  Part D  2  2  2  0 
Subtotal  126  111  25  1 
Part C  1  1  1  0 
29  50,000 to 250,000  Part D  124  124  2  98 
Subtotal  125  125  3  98 
Part C  2  2  0  1 
137  1,000 to 4,999  Part D  116  35  3  0 
Subtotal  118  37  3  1 
Part C  76  68  77  41 
38  Over 250,000  Part D  41  33  62  10 
Subtotal  117  101  139  51 
Part C  34  34  29  5 
52  50,000 to 250,000  Part D  79  81  73  8 
Subtotal  113  115  102  13 
Part C  50  51  45  43 
179  50,000 to 250,000  Part D  58  58  1  32 
Subtotal  108  109  46  75 
Part C  106  24  24  5 
180  5,000 to 19,999  Part D  1  1  1  0 
Subtotal  107  25  25  5 
Part C  89  89  68  12 
75  50,000 to 250,000  Part D  15  15  11  7 
Subtotal  104  104  79  19 
continued on next page 
 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  23 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  81  79  98  28 
69  Over 250,000  Part D  22  20  14  2 
Subtotal  103  99  112  30 
Part C  13  13  10  1 
73  20,000 to 49,999  Part D  85  85  107  0 
Subtotal  98  98  117  1 
Part C  82  58  90  7 
147  50,000 to 250,000  Part D  13  0  0  13 
Subtotal  95  58  90  20 
Part C  70  70  278  1 
1  50,000 to 250,000  Part D  24  24  54  0 
Subtotal  94  94  332  1 
Part C  88  88  83  72 
121  50,000 to 250,000  Part D  5  5  4  2 
Subtotal  93  93  87  74 
Part C  72  72  9  1 
107  1,000 to 4,999  Part D  21  21  1  0 
Subtotal  93  93  10  1 
Part C  64  55  49  13 
71  50,000 to 250,000  Part D  28  28  0  25 
Subtotal  92  83  49  38 
Part C  65  6  8  6 
106  50,000 to 250,000  Part D  24  3  3  9 
Subtotal  89  9  11  15 
Part C  82  67  67  1 
120  20,000 to 49,999  Part D  5  4  2  1 
Subtotal  87  71  69  2 
Part C  66  66  12  0 
124  5,000 to 19,999  Part D  16  16  3  0 
Subtotal  82  82  15  0 
Part C  0  *  *  * 
118  5,000 to 19,999  Part D  76  76  48  0 
Subtotal  76  76  48  0 
Part C  74  74  74  72 
122  1,000 to 4,999  Part D  1  1  0  0 
Subtotal  75  75  74  72 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  24 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  7  7  20  7 
64  20,000 to 49,999  Part D  60  60  20  0 
Subtotal  67  67  40  7 
Part C  51  49  53  1 
108  5,000 to 19,999  Part D  13  7  7  3 
Subtotal  64  56  60  4 
Part C  7  0  1  0 
86  50,000 to 250,000  Part D  57  0  0  1 
Subtotal  64  0  1  1 
Part C  0  *  *  * 
9  5,000 to 19,999  Part D  56  18  18  0 
Subtotal  56  18  18  0 
Part C  37  23  22  0 
53  50,000 to 250,000  Part D  18  18  2  0 
Subtotal  55  41  24  0 
Part C  51  0  0  0 
19  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  51  0  0  0 
Part C  0  *  *  * 
89  Fewer than 1,000  Part D  48  0  0  0 
Subtotal  48  0  0  0 
Part C  37  37  2  1 
31  Over 250,000  Part D  8  8  16  4 
Subtotal  45  45  18  5 
Part C  36  36  13  0 
41  5,000 to 19,999  Part D  9  9  1  4 
Subtotal  45  45  14  4 
Part C  0  *  *  * 
42  Fewer than 1,000  Part D  40  40  0  0 
Subtotal  40  40  0  0 
Part C  31  31  3  18 
90  20,000 to 49,999  Part D  8  8  0  6 
Subtotal  39  39  3  24 
Part C  29  31  3  4 
11  20,000 to 49,999  Part D  9  13  1  1 
Subtotal  38  44  4  5 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  25 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  1  1  0  0 
162  5,000 to 19,999  Part D  37  11  36  11 
Subtotal  38  12  36  11 
Part C  36  6  13  0 
167  5,000 to 19,999  Part D  NA2  *  *  * 
Subtotal  36  6  13  0 
Part C  32  27  48  0 
102  20,000 to 49,999  Part D  3  2  4  0 
Subtotal  35  29  52  0 
Part C  13  13  13  5 
12  50,000 to 250,000  Part D  19  19  19  4 
Subtotal  32  32  32  9 
Part C  14  8  12  1 
117  20,000 to 49,999  Part D  18  18  10  6 
Subtotal  32  26  22  7 
Part C  22  22  22  0 
5  50,000 to 250,000  Part D  7  7  7  7 
Subtotal  29  29  29  7 
Part C  22  22  15  1 
132  5,000 to 19,999  Part D  7  7  1  0 
Subtotal  29  29  16  1 
Part C  22  22  5  1 
22  20,000 to 49,999  Part D  2  2  2  2 
Subtotal  24  24  7  3 
Part C  7  7  0  0 
136  1,000 to 4,999  Part D  15  0  0  0 
Subtotal  22  7  0  0 
Part C  0  *  *  * 
146  1,000 to 4,999  Part D  22  0  0  0 
Subtotal  22  0  0  0 
Part C  20  20  2  0 
157  1,000 to 4,999  Part D  1  1  0  0 
Subtotal  21  21  2  0 
Part C  18  3  3  1 
100  20,000 to 49,999  Part D  3  0  0  0 
Subtotal  21  3  3  1 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  26 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  18  22  22  17 
168  20,000 to 49,999  Part D  2  4  4  2 
Subtotal  20  26  26  19 
Part C  18  18  28  3 
116  20,000 to 49,999  Part D  2  2  1  2 
Subtotal  20  20  29  5 
Part C  11  11  11  1 
88  50,000 to 250,000  Part D  8  8  1  7 
Subtotal  19  19  12  8 
Part C  16  16  4  0 
160  20,000 to 49,999  Part D  2  2  0  0 
Subtotal  18  18  4  0 
Part C  2  2  0  0 
93  1,000 to 4,999  Part D  16  0  16  0 
Subtotal  18  2  16  0 
Part C  14  14  10  0 
92  1,000 to 4,999  Part D  1  1  0  0 
Subtotal  15  15  10  0 
Part C  12  12  6  7 
154  Fewer than 1,000  Part D  3  3  2  2 
Subtotal  15  15  8  9 
Part C  14  14  2  0 
164  5,000 to 19,999  Part D  1  1  0  0 
Subtotal  15  15  2  0 
Part C  12  12  5  2 
111  5,000 to 19,999  Part D  2  2  4  2 
Subtotal  14  14  9  4 
Part C  14  14  7  4 
115  20,000 to 49,999  Part D  0  *  *  * 
Subtotal  14  14  7  4 
Part C  12  7  2  0 
6  5,000 to 19,999  Part D  1  1  1  0 
Subtotal  13  8  3  0 
Part C  12  0  0  0 
126  50,000 to 250,000  Part D  0  *  *  * 
Subtotal  12  0  0  0 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  27 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  12  0  0  0 
67  5,000 to 19,999  Part D  Unavailable3  *  *  * 
Subtotal  12  0  0  0 
Part C  1  1  0  1 
37  1,000 to 4,999  Part D  9  9  0  0 
Subtotal  10  10  0  1 
Part C  5  5  0  0 
113  1,000 to 4,999  Part D  5  5  0  0 
Subtotal  10  10  0  0 
Part C  10  0  0  0 
48  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  10  0  0  0 
Part C  2  2  0  0 
170  1,000 to 4,999  Part D  7  7  6  0 
Subtotal  9  9  6  0 
Part C  7  7  7  1 
138  20,000 to 49,999  Part D  1  1  1  1 
Subtotal  8  8  8  2 
Part C  3  3  0  3 
140  5,000 to 19,999  Part D  5  5  0  4 
Subtotal  8  8  0  7 
Part C  7  0  0  7 
46  5,000 to 19,999  Part D  1  1  2  1 
Subtotal  8  1  2  8 
Part C  7  0  0  0 
129  20,000 to 49,999  Part D  1  1  0  1 
Subtotal  8  1  0  1 
Part C  4  0  0  0 
171  1,000 to 4,999  Part D  4  0  0  0 
Subtotal  8  0  0  0 
Part C  8  0  0  0 
18  Fewer than  Part D  0  *  *  * 
1,000 
Subtotal  8  0  0  0 
Part C  3  3  4  3 
159  20,000 to 49,999  Part D  4  4  11  0 
Subtotal  7  7  15  3 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  28 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  7  7  12  0 
2  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  7  7  12  0 
Part C  5  0  0  1 
130  20,000 to 49,999  Part D  2  0  0  0 
Subtotal  7  0  0  1 
Part C  2  2  1  0 
96  20,000 to 49,999  Part D  4  4  4  4 
Subtotal  6  6  5  4 
Part C  6  6  3  0 
35  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  6  6  3  0 
Part C  4  3  3  3 
135  1,000 to 4,999  Part D  2  2  2  1 
Subtotal  6  5  5  4 
Part C  0  *  *  * 
45  20,000 to 49,999  Part D  5  5  10  5 
Subtotal  5  5  10  5 
Part C  5  5  5  1 
101  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  5  5  5  1 
Part C  5  5  5  0 
99  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  5  5  5  0 
Part C  4  3  3  1 
172  1,000 to 4,999  Part D  1  1  0  1 
Subtotal  5  4  3  2 
Part C  2  1  1  2 
141  20,000 to 49,999  Part D  3  3  1  3 
Subtotal  5  4  2  5 
Part C  4  4  3  2 
97  Fewer than  Part D  0  *  *  * 
1,000 
Subtotal  4  4  3  2 
Part C  3  3  1  2 
Fewer than 
49  Part D  1  1  1  1 
1,000 
Subtotal  4  4  2  3 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  29 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  4  4  2  0 
103  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  4  4  2  0 
Part C  4  3  10  3 
23  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  4  3  10  3 
Part C  3  6  0  0 
150  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  3  6  0  0 
Part C  3  3  3  0 
66  20,000 to 49,999  Part D  0  *  *  * 
Subtotal  3  3  3  0 
Part C  1  1  0  1 
104  5,000 to 19,999  Part D  2  2  0  2 
Subtotal  3  3  0  3 
Part C  2  2  0  0 
156  5,000 to 19,999  Part D  1  1  0  0 
Subtotal  3  3  0  0 
Part C  0  *  *  * 
56  1,000 to 4,999  Part D  3  2  2  1 
Subtotal  3  2  2  1 
Part C  0  *  *  * 
79  Fewer than 1,000  Part D  3  0  0  0 
Subtotal  3  0  0  0 
Part C  2  2  2  0 
50  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  2  2  2  0 
Part C  2  2  2  0 
131  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  2  2  2  0 
Part C  2  2  1  0 
158  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  2  2  1  0 
Part C  Unavailable4  *  *  * 
83  50,000 to 250,000  Part D  2  2  0  0 
Subtotal  2  2  0  0 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  30 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  1  1  1  0 
127  1,000 to 4,999  Part D  1  0  0  1 
Subtotal  2  1  1  1 
Part C  1  1  5  0 
30  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  1  1  5  0 
Part C  1  1  5  0 
177  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  1  1  5  0 
Part C  1  1  2  1 
125  20,000 to 49,999  Part D  0  *  *  * 
Subtotal  1  1  2  1 
Part C  0  *  *  * 
114  1,000 to 4,999  Part D  1  1  1  1 
Subtotal  1  1  1  1 
Part C  1  1  1  0 
165  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  1  1  1  0 
Part C  1  1  0  1 
94  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  1  1  0  1 
Part C  1  1  0  0 
152  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  1  1  0  0 
Part C  0  *  *  * 
28  1,000 to 4,999  Part D  1  0  0  0 
Subtotal  1  0  0  0 
Part C  0  *  *  * 
17  20,000 to 49,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
134  20,000 to 49,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
8  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  31 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  0  *  *  * 
Part D  0  *  *  * 
10  5,000 to 19,999 
Subtotal  0  *  * 
* 
Part C  0  *  *  * 
15  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
39  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
85  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
109  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
110  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
142  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
151  5,000 to 19,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
4  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
26  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
59  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
60  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  32 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
of Potential  Total Number  Total Number 
MA  Total Number 
Enrollment  Fraud and  of Corrective  of Incidents 
Organization    of Inquiries 
Category  Abuse  Actions  Referred to 
Identifier  Incidents  Conducted  Initiated  Other Entities1 
Identified 
Part C  0  *  *  * 
77  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
91  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
105  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
128  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
145  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
153  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
161  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
163  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
166  1,000 to 4,999  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
13  Fewer than  Part D  0  *  *  * 
1,000 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
27  Fewer than  Part D  0  *  *  * 
1,000 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
32  Fewer than  Part D  0  *  *  * 
1,000 
Subtotal  0  *  *  * 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  33 
   
   
Table B-1:  Fraud and Abuse Activities by MA Organization for 2009 (Continued) 
Total Number 
Total Number 
of Potential  Total Number 
MA  Total Number  of Incidents 
Enrollment  Fraud and  of Corrective 
Organization    of Inquiries  Referred to 
Category  Abuse  Actions 
Identifier  Conducted  Other 
Incidents  Initiated  Entities1 
Identified 
Part C  0  *  *  * 
55  Fewer than 1,000  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
68  Fewer than 1,000  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
82  Fewer than 1,000  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
133  Fewer than 1,000  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
139  Fewer than 1,000  Part D  0  *  *  * 
Subtotal  0  *  *  * 
Part C  0  *  *  * 
155  Fewer than 1,000  Part D  0  *  *  * 
Subtotal  0  *  *  * 
    Part C Total  1,271,532  1,035,162  1,025,483  1,307 
        Part D Total  160,151  153,107  108,580  723 
    Grand Total  1,431,683  1,188,269  1,134,063  2,030 
Source:  Office of Inspector General analysis of MA organizations survey responses and Centers for Medicare & Medicaid Services enrollment 
data. 
*These MA organizations did not identify any potential fraud and abuse incidents in 2009.   
1This column represents the number of incidents referred to other entities, not the number of referrals.  One potential fraud and abuse incident 
may be referred to multiple entities for further investigation. 
2MA organization 167 did not operate any Medicare Advantage Prescription Drug plans in 2009. 
3MA organization 67 could not provide information about potential Part D fraud and abuse incidents separate from incidents related to its other 
lines of business. 
4MA organization 83 could not provide information about potential Part C fraud and abuse incidents separate from incidents related to its other 
lines of business. 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  34 
   
   
APPENDIX C 
Types of Potential Part C and Part D Fraud and Abuse Identified by Medicare Advantage 
Organizations in 2009   
The examples cited in Tables C-1 and C-2 were derived from Chapter 9 of the Centers for 
Medicare & Medicaid Services (CMS) Prescription Drug Benefit Manual; CMSs Guidelines for 
Addressing Fraud and Abuse in Medicaid Managed Care, issued October 2000; and Medicare 
Advantage (MA) organizations responses to our survey. 
 
Table C-1:  Types of Potential Part C Fraud and Abuse Identified by MA Organizations in 2009 
Type of Fraud and 
Number of Incidents  Examples 
Abuse 
Top Three MA  Remaining MA 
   
Organizations  Organizations 
  By using the wrong billing code or separately billing for codes that 
could be included in a larger, more inclusive set of codes, the health 
Improper coding  1,145,196  39,451 
care provider is reimbursed at a higher rate than if the correct billing 
codes were used and the services were billed together. 
  Plan sponsor, first-tier entity, or downstream entity violated Medicare 
Marketing schemes  45  8,003  marketing guidelines or other Federal or State laws, rules, and 
regulations to improperly enroll beneficiaries in an MA plan.  
Billing for ineligible    Misrepresentation of beneficiary's personal identity or eligibility 
0  5,521 
consumers  information, medical condition, or plan enrollment information.  
Services never    Provider submits claims or encounter data for services that were 
0  3,522 
rendered  never provided to beneficiary. 
  Plan sponsor, health care provider, or other entity fails to provide 
Failure to provide 
medically necessary items or services that it is required to provide 
medically necessary  0  1,236 
under law or under the contract, and that failure adversely affects or is 
services 
substantially likely to affect the beneficiary.   
  The provider receives more than one payment for the same service 
Double billing or  and keeps the money, or bills the beneficiary directly for the total 
65,056  963 
balance billing  amount of the bill including the amount of the charge that the provider 
has agreed to write off after the MA organization has paid. 
  Questionable or suspicious billing practices.   
Suspect billing  0  387 
  Overutilization. 
Attempts to steal    Individual or organization poses as part of Medicare or Social Security 
beneficiary  38  338  with intent to steal beneficiary's identity or money. 
identity/money    Individual uses/steals another person's Medicare or MA card.  
Overcharging 
0  316    Overcharging beneficiary for improper coinsurance or premiums. 
beneficiary 
  Member complaints of improper provider billing.   
  Billing incorrect carrier.   
  Other insurance primary.   
Billing errors/issues  0  245    Billing wrong contract number.   
  Failure to disclose overpayment.   
  Charges exceed contract.   
  Entity overcharging the MA plan.   
continued on next page 
 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  35 
   
   
Table C-1:  Types of Potential Part C Fraud and Abuse Identified by MA Organizations in 2009 
(Continued) 
Type of Fraud and 
Number of Incidents  Examples 
Abuse 
Top Three MA  Remaining MA 
   
Organizations  Organizations 
  Selecting/denying beneficiaries based on illness profile or other 
Adverse selection  2  212 
discriminatory factors.   
  This can occur either at the MA organization or downstream.  
Falsification of health  Falsification of provider credentials may result in improper 
0  210 
care provider credentials  payment for the services of a provider who does not meet 
required professional qualifications.  
  Law enforcement request for information.   
Request for information  0  104 
  Request for assistance from external entity. 
Improper cost reporting or    Providers submit inflated reports of patient traffic and treatment 
0  102 
cost shifting  costs to induce payers to increase future per-patient payments.  
  Questionable enrollment.   
Enrollment/disenrollment    Improper disenrollment or enrollment activity.   
5  96 
issue    Attempted enrollment without beneficiary approval.   
  Falsified enrollment information. 
Outside scope of practice  0  70    Physicians provide services outside their scope of practice.  
  Member complaints of testing being ordered by physician that the 
Medical necessity or 
0  44  member did not feel was necessary.   
appropriateness issue 
  Provider billing for unnecessary services.   
  Inappropriate discounts, support services, educational grants, or 
research funding.  
  Improper entertainment or business courtesies.  
Inducements, kickbacks, 
  The MA organization may subcontract with entities that have 
bribes, or tying  0  38 
expertise in a particular area.  If the subcontractor requires the 
agreements 
MA organization to contract with other entities as a condition for 
the subcontractor to provide services, the MA organization could 
incur inflated costs.    
  Provider indicted for Medicare fraud.   
Investigations  0  36 
  Provider under State/Federal investigation. 
  Patient seen after termination.   
  Fraudulent billing for unauthorized poststabilization inpatient 
services at several noncontracted hospitals that are part of a 
commonly owned chain.   
Unauthorized services or    Provider's license was revoked.   
0  33 
provider    Provider referring lab services to a nonparticipating vendor.   
  Billing for items/tests not ordered or covered.   
  Out of geographical service area. 
  Noncredentialed providerincorrect reporting of rendering 
provider.   
Falsification of financial    A first-tier or downstream entity can purport to have sufficient 
0  26 
solvency  assets to cover claims when, in fact, it lacks financial solvency.  
  Falsification of medical record or dates of service.   
Falsification of records or    Member falsification of a medical referral. 
0  25 
other data    Forged physicians signature.   
  Forged or altered durable medical equipment (DME) prescription.   
 
continued on next page
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  36 
   
   
Table C-1:  Types of Potential Part C Fraud and Abuse Identified by MA Organizations in 2009 
(Continued) 
Type of Fraud and 
Number of Incidents  Examples 
Abuse 
Top Three MA  Remaining MA 
   
Organizations  Organizations 
  Member sold DME to another party.  
  Fraudulent use of benefits.   
Beneficiary abuse of    Illegal use/sale of prescription drugs.  
0  18 
benefits    Alteration of claim by member.   
  Beneficiary, a former practicing physician, wrote a prescription for 
his own use. 
Quality of care issue  0  10    Member complaint of poor quality of products, services. 
  Under a capitated arrangement, specialists may be paid by a 
primary care physician (PCP) using a portion of the PCPs 
Inappropriate physician  capitation payment if a referral is made.  Fraud can occur if the 
0  9 
incentive plans  PCP receiving capitation payment does not reimburse specialists 
or does not refer members to specialists even if medically 
necessary. 
  Failure to generate or report complete and accurate information 
upon which Government reimbursement depends, in whole or in 
Providing data to CMS 
1  8  part. 
that lack integrity 
  Improperly reporting enrollment/disenrollment data to CMS to 
inflate prospective payments.  
Health Insurance 
Portability and  0  8    Member received another member's identification card.   
Accountability Act issue 
Collusion among    Competing providers agree on minimum fees charged and 
1  7 
providers  capitation rates accepted.  
  Self-referral.   
  Improper soliciting by DME provider.   
Provider misconduct  0  7    Provider requires prospective patients to sign a form prior to 
treatment that they are waiving their constitutional rights as 
provided in Article I Section 21 of the Florida Constitution.  
Drug-seeking beneficiary  0  3    Member drug-seeking behavior.   
Possible member abuse  0  3    Possible physical or psychological abuse of member.  
Waiver of member    Routinely waiving copayments and deductibles to misrepresent a 
0  3 
copayment  providers actual charge. 
  For these incidents, MA organizations did not specify the type of 
Unspecified  0  139  fraud, reported the type as miscellaneous, or provided a 
description that was too vague to categorize. 
     Total  1,210,344  61,1931   
Source:  Office of Inspector General (OIG) analysis of MA organizations survey responses. 
1The total number of incidents identified was 61,188.  However, five MA organizations reported two types of fraud for one potential fraud and abuse incident. 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  37 
   
   
Table C-2:  Types of Potential Part D Fraud and Abuse Identified by MA Organizations in 2009 
Type of Fraud and 
Number of Incidents  Examples 
Abuse 
Top Three MA  Remaining MA 
   
Organizations  Organizations 
  Billing for brand-name drugs when generics are dispensed. 
Inappropriate billing for 
104,550  2,338    Billing for noncovered prescriptions as covered items.  
prescriptions 
  Billing for prescriptions that are never picked up. 
  Dispensing expired or adulterated prescription drugs.  
Inappropriate prescription    Dispensing without a prescription.  
32,110  3,764 
dispensing    Splitting:  pharmacist or mail-order pharmacy splits prescription 
to receive additional dispensing fee. 
  Using the wrong billing code or unbundling the codes included in 
a larger, more inclusive set of codes, the health care provider is 
Improper coding  8,800  1 
reimbursed at a higher rate than if the correct billing codes were 
used and the services were billed together. 
  Beneficiary consults a number of doctors for the purpose of 
Doctor shopping,  inappropriately obtaining multiple prescriptions for narcotic 
potential drug abuse, or  1,200  3,101  painkillers or other drugs. 
stockpiling    Beneficiary attempts to game her/his drug coverage by obtaining 
and storing large quantities of drugs and then disenrolling. 
  Physicians write prescriptions outside the boundaries of their 
Inappropriate prescribing  800  637  scope of practice. 
  Prescriber is on the OIG exclusion list. 
  Misrepresentation of plan benefits.   
  Misrepresentation of services.   
Marketing schemes  0  695    Member received unwanted mail from another plan.   
  Competitors cold-calling Medicare Part D members, i.e., 
inappropriate soliciting.   
  Pharmacy asking beneficiary to pay uncompensated amounts.  
Overcharging beneficiary    Bait-and-switch pricing, i.e., beneficiary is led to believe a drug 
0  492 
for prescriptions  will cost one price, but at point of sale is charged a higher 
amount. 
  Provider receives more than one payment for the same service 
and keeps the money, or the provider bills the beneficiary directly 
Double billing or balance 
377  2  for the total amount of the bill including the amount of the charge 
billing 
that the provider has agreed to write off after the MA 
organization has paid. 
  Potential fraud scenarios referred by the beneficiaries in 
response to their monthly Part D explanation of benefits 
Prescription errors/issues  0  310  discrepancies:  members allege they did not receive dispensed 
prescriptions which were registered under their contract.   
  Missing or invalid prescriptions.   
Attempts to steal 
  Individual uses another person's Medicare or insurance card to 
beneficiary identity to  2  190 
obtain prescriptions. 
obtain prescriptions 
Inappropriate prescribing    Physicians identified as prescribing high volume of controlled 
0  182 
of controlled substances  substances. 
Pharmacy unresponsive 
0  151    Pharmacy did not respond to desk audit or in-store audit request. 
to audit request 
continued on next page 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  38 
   
   
Table C-2:  Types of Potential Part D Fraud and Abuse Identified by MA Organizations in 2009 
(Continued) 
Type of Fraud and 
Number of Incidents  Examples 
Abuse 
Top Three MA  Remaining MA 
   
Organizations  Organizations 
  Plan sponsor or health care provider fails to provide medically 
Failure to provide 
necessary prescriptions that the organization is required to 
medically necessary  0  124 
provide under law or under the contract, and that failure 
prescription drugs 
adversely affects or is likely to affect the beneficiary. 
Forged or altered    Prescriptions are forged or altered by someone other than the 
prescriptions or other  0  102  prescriber or pharmacist without prescriber approval to increase 
documents  quantity or number of refills. 
  Beneficiary obtains prescription drugs from a provider and gives 
or sells this medication to someone else.   
Diverting prescriptions  0  46 
  Inappropriate consumption or distribution of a beneficiary's 
medications by a caregiver or anyone else. 
Enrollment/disenrollment    Ineligible member.  
0  38 
issue    Member had two insurance plans. 
Medical necessity or    Medical appropriateness. 
0  20 
appropriateness issue    Provider billing for unnecessary services.   
Theft of prescriber's 
  In context of e-prescribing, includes theft of provider's login 
prescription pad or  0  17 
information. 
prescriber number 
  Cases opened as a result of law enforcement request for data in 
support of investigations.   
Request for information  0  13    Request for assistance from external entity.   
  Request from Attorney General on member and prescribers--top 
10 by cost/volume. 
  Drug Enforcement Administration fraud investigation.   
Investigations  0  11 
  Other type of investigation. 
  Prescriber is offered inappropriate discounts, support services, 
Inducements, kickbacks, 
0  5  educational grants, research funding, improper entertainment, or 
or bribes 
business courtesies. 
  Submitting inaccurate or incomplete Prescription Drug Event data 
Providing data to CMS 
1  4  or Part D plan quarterly data. 
that lacks integrity 
  Inappropriate documentation of pricing information. 
Beneficiary true out-of-   Incorrect TrOOP calculation that results in improper payments by 
pocket (TrOOP) costs or  CMS or beneficiary. 
0  3 
low-income subsidy    Beneficiary not receiving the low-income benefit approved by 
manipulation   CMS. 
Unauthorized services    Out of service area.   
0  3 
or provider    Failure to follow authorization rules.   
  Questionable or suspicious billing practices.   
Suspect billing  0  1 
  Overutilization. 
  For these incidents, MA organizations either did not specify the 
Unspecified  0  61  type of fraud, reported the type as miscellaneous, or provided a 
description that was too vague to categorize. 
     Total  147,840  12,311   
 
Source:  OIG analysis of MA organizations survey responses.
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  39 
   
   
APPENDIX D 
 
Table D-1:  Types of Corrective Actions Initiated by Medicare Advantage 
Organizations in 2009 
Number of Part C Corrective  Number of Part D Corrective 
Type of Corrective Action 
Actions  Actions 
Top Three MA1  Remaining MA  Top Three MA  Remaining MA 
 
Organizations  Organizations  Organizations  Organizations 
Prepayment review  997,977  2,005  100,906  71 
Collection of overpayment  11,626  2,228  2,798  3,104 
Provider education  578  7,608  0  434 
Disciplinary action  42  1,267  0  61 
Postpayment review  1  909  65  594 
Utilization monitoring  0  504  0  144 
Counseling/coaching  0  288  0  3 
Termination from network  11  80  0  132 
Employee training  0  64  0  17 
Administrative actions  0  51  0  7 
Member education  0  32  0  1 
Policy or procedure change  0  30  0  112 
Agent termination  0  30  0  1 
Agent/broker training  0  11  0  0 
Monitoring  0  10  0  0 
Referral for corrective action 
0  4  0  6 
or corrective action plan 
Case management  0  1  0  21 
Exclusion from network 
0  0  0  44 
participation 
Other education efforts  0  0  0  37 
Claim correction/reversal  0  0  0  6 
Internal referrals  0  0  0  3 
Unspecified  0  126  0  13 
     Total  1,010,235  15,248  103,769  4,811 
1 Medicare Advantage. 
 
Source:  Office of Inspector General analysis of MA organizations survey responses.
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  40 
   
   
APPENDIX E 
 
Table E-1:  Referrals to Other Entities for Further Investigation by Medicare Advantage 
Organizations in 2009 
Entity That Received 
Total 
Referrals of Potential 
Number of Part C Referrals  Number of Part D Referrals  Number of 
Fraud and Abuse 
Referrals 
Incidents 
Top Three MA1  Remaining MA  Top Three MA  Remaining MA 
   
Organizations  Organizations  Organizations  Organizations 
Medicare drug integrity 
39  275  0  469  784 
contractors 
State insurance 
0  403  0  67  470 
commissioners 
Office of Inspector General 
0  371  0  47  418 
(OIG) 
Department of Justice  0  187  0  158  345 
State agency  0  218  0  24  242 
State or local law 
0  74  0  137  211 
enforcement 
Centers for Medicare & 
0  49  0  4  53 
Medicaid Services 
Licensing board  0  40  0  8  48 
National Health Care  
0  19  0  0  19 
Anti-Fraud Association 
Insurance fraud bureau  0  8  0  3  11 
Medicaid agency  0  10  0  0  10 
State Board of Pharmacy  0  0  0  4  4 
National Association of 
0  1  0  0  1 
Insurance Commissioners 
Other entities  0  34  1  6  40 
     Total  39  1,689  1  927  2,656  
1 Medicare Advantage. 
Source:  OIG analysis of MA organizations survey responses. 
 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  41 
  APPENDIX F 
Agency Comments 
/,p'''''' ... 
~	 Cenler. for Medicare & Medicaid Services
(  DEPARTMENT OF HEALTH & HUMAN SERVICES 
,,~~\"" 	
Administrator 
Washinglon. DC 20201 
DATE:  DE': ~. 8 2011 
TO: 	 Daniel R. Levinson 

InspectoI General 

FROM: 	 Man~Ta~nner 

Acting Adb:ljjjstrator 

SUBJECT: 	 Office ofInspector General (OIG) Draft Report: "Medicare Advantage 
Organizations' Identification of Potential Fraud and Abuse" (OEI -03-10-00310) 
The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 
comment on the Office of Inspector General (OIG) draft report entitled, "Medicare Advantage 
Organizations' Identification of Potential Fraud and Abuse." This report has multiple objectives. 
First, it seeks to determine the extent to which Medicare Advantage (MA) organizations identify 
potential fraud and abuse related to their Part C and, ifapplicable, Part D plans. Secondly, it 
determined the extent to which MA organizations conduct inquiries, initiate corrective actions, 
and make referrals for further investigation in response to potential fraud and abuse incidents. 
MA organizations' efforts to identify and address potential fraud and abuse are crucial to 
protecting the integrity of the MA program. These organizations are required to have 
compliance plans in place that include programs to detect, correct and prevent fraudulent and 
abusive activity. 
We appreciate the OIG's efforts in working with CMS to help ensure that vulnerabilities are 
addressed. CMS response to each of the OIG recommendations and other comments follow. 
OIG Recommendation 
Ensure that MA organizations are implementing programs to detect, correct, and prevent fraud, 
waste, and abuse, as required in their compliance plans, so that all potential Part C and Part D 
fraud and abuse incidents may be identified. 
CMS Response 
The CMS concurs with this recommendation. As noted in OIG's findings, CMS already 
conducted 33 compliance plan audits in 2010. These compliance program audits include an 
evaluation ofan MA organizations' implementation and effectiveness of its programs to detect, 
correct, and prevent fraud, waste, and abuse. 
OEI-03-10-00310  Medicare Advantage Organizations' Identification of Potential Fraud and Abuse  42   
   
Agency Comments (Continued) 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  43 
   
   
Agency Comments (Continued) 
   
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  44 
   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Robert A. Vito, Regional 
Inspector General for Evaluation and Inspections in the Philadelphia 
regional office, and Linda M. Ragone, Deputy Regional Inspector General.   
Amy Sernyak served as the team leader for this study.  Other principal 
Office of Evaluation and Inspections staff from the Philadelphia regional 
office who contributed to the report include Conswelia McCourt and 
Joanna Bisgaier; central office staff who contributed include Kevin Farber 
and Rita M. Wurm. 
 
 
OEI-03-10-00310  Medicare Advantage Organizations Identification of Potential Fraud and Abuse  45 
   
   
Office of Inspector General 
http://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is 
to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 
health and welfare of beneficiaries served by those programs.  This statutory mission is carried out through 
a nationwide network of audits, investigations, and inspections conducted by the following operating 
components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by 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 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 economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 
and the public with timely, useful, and reliable information on significant issues.  These evaluations focus 
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of 
departmental programs.  To promote impact, OEI reports also present practical recommendations for 
improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 
misconduct related to HHS programs, operations, and beneficiaries.  With investigators working in all 
50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the 
Department of Justice and other Federal, State, and local law enforcement authorities.  The investigative 
efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 
advice and opinions on HHS programs and operations and providing all legal support for OIGs internal 
operations.  OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 
programs, including False Claims Act, program exclusion, and civil monetary penalty 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 anti-kickback statute and other OIG enforcement 
authorities.