The Department of Health and Human Services 
And 
The Department of Justice 
Health Care Fraud and Abuse Control Program 
Annual Report for Fiscal Year 2018 
May 2019  Table of Contents 
EXECUTIVE SUMMARY ............................................................................................................ 3 
STATUTORY BACKGROUND ................................................................................................... 5 
PROGRAM RESULTS AND ACCOMPLISHMENTS ................................................................ 7 
Expenditures ............................................................................................................................... 9 
Overall Recoveries .................................................................................................................... 10 
Health Care Fraud Prevention and Enforcement Action Team (HEAT) .................................. 10 
Healthcare Fraud Prevention Partnership (HFPP) .................................................................... 12 
Medicare Fraud Strike Force .................................................................................................... 12 
Opioid Fraud and Abuse Detection Unit .................................................................................. 14 
Highlights of Significant Criminal and Civil Investigations .................................................... 15 
DEPARTMENT OF HEALTH AND HUMAN SERVICES ....................................................... 36 
Office of Inspector General ...................................................................................................... 36 
Centers for Medicare & Medicaid Services .............................................................................. 63 
Administration for Community Living ..................................................................................... 84 
Office of the General Counsel .................................................................................................. 88 
Food and Drug Administration Pharmaceutical Fraud Program ............................................... 92 
DEPARTMENT OF JUSTICE ..................................................................................................... 95 
United States Attorneys ............................................................................................................ 95 
Civil Division ............................................................................................................................ 96 
Criminal Division.................................................................................................................... 101 
Civil Rights Division .............................................................................................................. 105 
Office of Inspector General .................................................................................................... 110 
APPENDIX ................................................................................................................................. 111 
Federal Bureau of Investigation .............................................................................................. 111 
Return on Investment Calculation .......................................................................................... 115 
Total Health Care Fraud and Abuse Control Resources ......................................................... 116 
Glossary of Common Terms ................................................................................................... 117 
 
GENERAL NOTE 
All years are fiscal years unless 
otherwise stated in the text. 
   
 
  EXECUTIVE SUMMARY 
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) established a national 
Health Care Fraud and Abuse Control Program (HCFAC or the Program) under the joint 
direction of the Attorney General and the Secretary of the Department of Health and Human 
Services (HHS)1, acting through the Inspector General, designed to coordinate federal, state and 
local law enforcement activities with respect to health care fraud and abuse.  In its twenty-second 
year of operation, the Programs continued success confirms the soundness of a collaborative 
approach to identify and prosecute the most egregious instances of health care fraud, to prevent 
future fraud and abuse, and to protect program beneficiaries. 
During Fiscal Year (FY) 2018, the Federal Government won or negotiated over $2.3 billion in 
health care fraud judgments and settlements2, in addition to other health care administrative 
impositions.  As a result of these efforts, as well as those of preceding years, $2.3 billion was 
returned to the Federal Government or paid to private persons in FY 2018.  Of this $2.3 billion, 
the Medicare Trust Funds3 received transfers of approximately $1.2 billion during this period, in 
addition to the $232 million in Federal Medicaid money that was similarly transferred separately 
to the Treasury as a result of these efforts.   
Enforcement Actions 
In FY 2018, the Department of Justice (DOJ) opened 1,139 new criminal health care fraud 
investigations.  Federal prosecutors filed criminal charges in 572 cases involving 872 defendants.  
A total of 497 defendants were convicted of health care fraud-related crimes during the year.  
Also in FY 2018, DOJ opened 918 new civil health care fraud investigations and had 1,203 civil 
health care fraud matters pending at the end of the fiscal year.  In FY 2018, FBI investigative 
efforts resulted in over 812 operational disruptions of criminal fraud organizations and the 
dismantlement of the criminal hierarchy of more than 207 health care fraud criminal schemes.  
In FY 2018, investigations conducted by HHS Office of Inspector General (HHS-OIG) resulted 
in 679 criminal actions against individuals or entities that engaged in crimes related to Medicare 
and Medicaid, and 795 civil actions, which include false claims and unjust-enrichment lawsuits 
filed in federal district court, civil monetary penalties (CMP) settlements, and administrative 
recoveries related to provider self-disclosure matters.  HHS-OIG also excluded 2,712 individuals 
and entities from participation in Medicare, Medicaid, and other federal health care programs.  
Among these were exclusions based on criminal convictions for crimes related to Medicare and 
Medicaid (1,012) or to other health care programs (255), for patient abuse or neglect (201), and 
as a result of State healthcare licensure revocations (996).  HHS-OIG also issued numerous 
                                                 
1 Hereafter, referred to as the Secretary. 
2 The amount reported as won or negotiated only reflects the federal recoveries and therefore does not reflect state 
Medicaid monies recovered as part of any global federal-state settlements. 
3 The Medicare Trust Funds is the collective term for the Medicare Hospital Insurance (Part A) Trust Fund and the 
Supplemental Medical Insurance (Part B) Trust Fund. 
3  audits and evaluations with recommendations that, when implemented, would correct program 
vulnerabilities and save Medicare and Medicaid funds. 
Sequestration Impact 
Due to the 2018 sequestration of mandatory funding, DOJ, FBI, HHS, and HHS-OIG had fewer 
resources to fight fraud and abuse of Medicare, Medicaid, and other health care programs.  A 
total of $20.2 million was sequestered from the HCFAC program in FY 2018, for a combined 
total of $135.7 million sequestered in the past five years.  Including funds sequestered from the 
FBI and the FY 2013 discretionary HCFAC sequester, $191.4 million has been sequestered in 
the past five years. 
4  STATUTORY BACKGROUND 
The Annual Report of the Attorney General and the Secretary detailing expenditures and 
revenues under the Health Care Fraud and Abuse Control Program for Fiscal Year 2018 is 
provided as required by Section 1817(k)(5) of the Social Security Act.  
The Social Security Act Section 1128C(a), as established by the Health Insurance Portability and 
Accountability Act of 1996 (P.L. 104-191, HIPAA or the Act), created the Health Care Fraud 
and Abuse Control Program, a far-reaching program to combat fraud and abuse in health care, 
including both public and private health plans.   
As was the case before HIPAA, amounts paid to Medicare in restitution or for compensatory 
damages must be deposited in the Medicare Trust Funds.  The Act requires that an amount 
equaling recoveries from health care investigations  including criminal fines, forfeitures, civil 
settlements and judgments, and administrative penalties  also be deposited in the Trust Funds.   
The Act appropriates monies from the Medicare Hospital Insurance Trust Fund to an expenditure 
account, called the Health Care Fraud and Abuse Control Account (the Account), in amounts that 
the Secretary and Attorney General jointly certify as necessary to finance anti-fraud activities.  
The maximum amounts available for certification are specified in the Act.  Certain of these sums 
are to be used only for activities of the HHS-OIG, with respect to the Medicare and Medicaid 
programs.  In FY 2006, the Tax Relief and Health Care Act (TRHCA) (P.L 109-432, 303) 
amended the Act so that funds allotted from the Account are available until expended.  
TRHCA also allowed for yearly increases to the Account based on the change in the consumer 
price index for all urban consumers (all items, United States city average) (CPI-U) over the 
previous fiscal year for fiscal years for 2007 through 2010.4  In FY 2010, the Patient Protection 
and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, 
collectively referred to as the Affordable Care Act (P.L. 111-148, ACA) extended permanently 
the yearly increases to the Account based upon the change in the consumer price index for all 
urban consumers, or CPI-U. 
In FY 2018, the Secretary and the Attorney General certified $286.2 million in mandatory 
funding to the Account after accounting for sequester reductions of $20.2 million to the total 
appropriation.  Additionally, Congress appropriated $745 million in discretionary funding.  A 
detailed breakdown of the allocation of these funds is set forth later in this report.  HCFAC 
appropriations generally supplement the direct appropriations of HHS that are devoted to health 
care fraud enforcement and have supported over two-thirds of DOJs health care fraud funding 
and over three-fourths of HHS-OIGs appropriated budget in FY 2018.  (Separately, the FBI, 
which is discussed in the appendix, received $134.5 million from HIPAA, after accounting for 
mandatory sequester reductions.)  Under the joint direction of the Attorney General and the 
                                                 
4 The CPI-U adjustment in TRHCA did not apply to the Medicare Integrity Program (MIP).  Section 6402 of the 
ACA indexed Medicare Integrity Program funding to inflation starting in FY 2010. 
5  Secretary, the Programs goals are: 
(1) To coordinate federal, state and local law enforcement efforts relating to health care fraud 
and abuse with respect to health plans; 
(2) To conduct investigations, audits, inspections, and evaluations relating to the delivery of 
and payment for health care in the United States; 
(3) To facilitate enforcement of all applicable remedies for such fraud; and 
(4) To provide education and guidance regarding complying with current health care law. 
Additionally, the Act requires the Attorney General and the Secretary to submit a joint annual 
report to the Congress that identifies both: 
(1) The amounts appropriated to the Trust Funds for the previous fiscal year under various 
categories and the source of such amounts; and 
(2) The amounts appropriated from the Trust Funds for such year for use by the Attorney 
General and the Secretary and the justification for the expenditure of such amounts. 
(3) This annual report fulfills the above statutory requirements.   
Additionally, this report fulfills the requirement in the annual discretionary HCFAC 
appropriation (Public Law 115-141Consolidated Appropriations Act, 2018) that this report 
include measures of the operational efficiency and impact on fraud, waste, and abuse in the 
Medicare, Medicaid, and CHIP programs for the funds provided by this appropriation. 
6  PROGRAM RESULTS AND ACCOMPLISHMENTS 
As required by the Act, HHS and DOJ must detail in this Annual Report the amounts deposited 
to the Medicare Trust Funds and the source of such deposits.  In FY 2018, $2.3 billion was 
deposited with the Department of the Treasury and CMS, transferred to other federal agencies 
administering health care programs, or paid to private persons during the fiscal year.  Monetary 
results from these transfers and deposits are provided in the table below:  
Monetary Results:  Total Transfers / Deposits by Recipient FY 2018 
Department of the Treasury     
  Deposits to the Medicare Trust Fund, as required by HIPAA:    
    Gifts and Bequests  $0 
    Amount Equal to Criminal Fines  1,897,113 
    Civil Monetary Penalties  49,208,054 
    Asset Forfeiture  56,632,467 
    Penalties and Multiple Damages  556,473,088 
          Subtotal  664,210,722 
Centers for Medicare and Medicaid Services   
   HHS/OIG Audit Disallowances:  RecoveredMedicare  113,927,142 
   Restitution/Compensatory Damages*  437,779,171 
          Subtotal   551,706,313 
Total Transferred to the Medicare Trust Funds  $1,215,917,035 
Restitution/Compensatory Damages to Federal Agencies    
   TRICARE  $34,452,969 
   HHS/OIG  14,870,959 
   Office of Personnel Management  2,581,753 
   Other Agencies  170,666,903 
          Subtotal   222,572,584 
Centers for Medicare and Medicaid Services   
   Federal Share of Medicaid  231,975,821 
   HHS/OIG Audit Disallowances:  RecoveredMedicaid  318,148,231 
          Subtotal   550,124,052 
Total  $772,696,636 
Relators' Payments**  $321,909,653 
GRAND TOTAL MONETARY RESULTS***  $2,310,523,324 
*Restitution, compensatory damages, and recovered audit disallowances include returns to both the 
Medicare Hospital Insurance (Part A) Trust Fund and the Supplemental Medical Insurance (Part B) Trust 
Fund. 
**These are funds awarded to private persons who file suits on behalf of the Federal Government under 
the qui tam (whistleblower) provisions of the False Claims Act, 31 U.S.C.   3730(b). 
***State funds are also collected on behalf of state Medicaid programs; only the Federal share of 
Medicaid funds transferred to CMS are represented here. 
7  The above transfers include certain collections, or amounts equal to certain collections, required 
by HIPAA to be deposited directly into the Medicare Trust Funds.  These amounts include: 
(1) Gifts and bequests made unconditionally to the Trust Funds, for the benefit of the 
Account or any activity financed through the Account; 
(2) Criminal fines recovered in cases involving a federal health care offense, including 
collections under section 24(a) of Title 18, United States Code (relating to health care 
fraud); 
(3) Civil monetary penalties in cases involving a federal health care offense; 
(4) Amounts resulting from the forfeiture of property by reason of a federal health care 
offense, including collections under section 982(a)(7) of Title 18, United States Code; 
and 
(5) Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the 
general fund of the Treasury obtained under sections 3729 through 3733 of Title 31, 
United States Code (known as the False Claims Act, or FCA), in cases involving claims 
related to the provision of health care items and services (other than funds awarded to a 
relator, for restitution or otherwise authorized by law).   
8  Expenditures 
In the twenty-second year of operation, the Secretary and the Attorney General certified 
$286.2 million in mandatory funding as necessary for the Program, after accounting for 
mandatory sequester reductions of $20.2 million as required by law.  Additionally, Congress 
appropriated $745 million in discretionary funding.  See allocation by recipient below: 
FY 2018 ALLOCATION OF HCFAC APPROPRIATION 
Mandatory  Discretionary  Funds
Organization  Total Allocation
Allocation5  Allocation  Sequestered 
Department of Health and Human  Mandatory  Discretionary  Funds Sequestered Total Allocation
Services  Allocation 5 Allocation
Office of Inspector General6  $213,896,374  $84,398,000  ($13,453,597)  $284,840,777 
Office of the General Counsel  7,147,000  0  0  7,147,000 
Administration for Community Living7 0  18,000,000  0  18,000,000 
Food and Drug Administration  5,853,177  0  0  5,853,177 
Centers for Medicare & Medicaid 
12,000,000  566,766,000  0  578,766,000 
Services 
Unallocated Funding  3,933,117  0  (2,573,161)  1,359,956 
   Subtotal  242,829,668  669,164,000  (16,026,758)  895,966,910 
  
Department of Justice  Mandatory Allocation 5 Discretionary Allocation Funds Sequestered Total Allocation
United States Attorneys  $29,497,487  $21,000,000  $0  $50,497,487 
Civil Division8  19,641,199  16,639,000  0  36,280,199 
Criminal Division  6,939,338  18,387,000  0  25,326,338 
Civil Rights Division  3,335,652  7,558,000  0  10,893,652 
Justice Management Division  30,942  0  0  30,942 
Federal Bureau of Investigation  0  11,422,000  0  11,422,000 
Office of the Inspector General  0  830,000  0  830,000 
Unallocated Funding  4,200,583  0  (4,200,583)  0 
   Subtotal  63,645,201  75,836,000  (4,200,583)  135,280,618 
TOTAL9  $306,474,869  $745,000,000  ($20,227,341)  $1,031,247,528 
 5
5 As of FY 2007, mandatory funds are available until expended.  Discretionary funds are available for two years. 
6 In addition, HHS-OIG obligated $7.1 million in funds received as reimbursement for the costs of conducting 
investigations and audits and for monitoring compliance plans as authorized by section 1128C(b) of the Social 
Security Act, 42 U.S.C.  1320a-7c(b).   
7 CMSs discretionary HCFAC funds were allocated to the Administration for Community Living to support the 
Senior Medicare Patrol Program. 
8 The Elder Justice Initiative, managed by the Civil Division, is included in the Civil Division figures.   
9 Amounts only represent those that are provided by statute, and do not include other mandatory sources or 
discretionary appropriated sources provided through Departments annual appropriations. 
9  Overall Recoveries 
During this fiscal year, the Federal Government won or negotiated over $2.3 billion in judgments 
and settlements, and attained additional administrative impositions in health care fraud cases and 
proceedings.  As a result of these efforts, as well as those of preceding years, approximately $2.3 
billion was returned to the Federal Government or private persons.  Of this $2.3 billion, the 
Medicare Trust Funds received transfers of approximately $1.2 billion during this period; and 
another $232 million in Federal Medicaid money was transferred to the Treasury separately as a 
result of these efforts.10 
In addition to these enforcement actions, numerous audits, evaluations and other coordinated 
efforts yielded recoveries of overpaid funds, and prompted changes in federal health care 
programs that reduce vulnerability to fraud.   
The return on investment (ROI) for the HCFAC program over the last three years (2016-2018)) 
is $4.00 returned for every $1.00 expended.11 Because the annual ROI can vary from year to year 
depending on the number and type of cases that are settled or adjudicated during that year, DOJ 
and HHS use a three-year rolling average ROI for results contained in the report.  Additional 
information on how the ROI is calculated can be found in the Appendix. 
It is important to note that the ROI does not capture the full impact of the results of the Program.  
For example, criminal action, from either a search warrant, an indictment or an arrest, prevents 
the defendant from continuing to defraud federal health care programs.  Therefore, this ROI 
calculation that relies on actual recoveries and collections, does not represent the effect of 
preventing future fraudulent payments.  Further, the threat of oversight alone can have a sentinel 
impact that prevents future bad actors from defrauding Medicaid, Medicare and other federal 
health care benefit programs.  
Health Care Fraud Prevention and Enforcement Action Team (HEAT) 
The Attorney General and the Secretary maintain regular consultation at both senior and staff 
levels to accomplish the goals of the HCFAC Program.  With the creation of the Health Care 
Fraud Prevention and Enforcement Action Team (HEAT) effort, DOJ and HHS pledged a 
commitment to prevent and prosecute health care fraud.  These teams are comprised of top level 
law enforcement agents, prosecutors, attorneys, auditors, evaluators, and other staff from DOJ 
and HHS and their operating divisions, and are dedicated to joint efforts across government to 
both prevent fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud 
Strike Force teams are a key component of HEAT. 
                                                 
10 Note that some of the judgments, settlements, and administrative actions that occurred in FY 2018 will result in 
transfers in future years, just as some of the transfers in FY 2018 are attributable to actions from prior years 
11 The three-year average return on investment includes a downward adjustment to the savings assumed in the FY 
2017 Report on HCFAC Recoveries.   The FY 2017 OIG Audit Disallowances were corrected by reducing them 
from $365.2 million to $175.6 million.  The updated FY 2017 three year average return on investment (2015-2017) 
is $4.1 returned for every $1.00 expended. 
10  The mission of HEAT is: 
  To marshal significant resources across government to prevent waste, fraud and 
abuse in the Medicare and Medicaid programs and crack down on the fraud 
perpetrators who are abusing the system and costing us all billions of dollars. 
  To reduce health care costs and improve the quality of care by ridding the system of 
perpetrators who are preying on Medicare and Medicaid beneficiaries. 
  To target doctors and physicians who prescribe opioids outside the scope of 
legitimate medical practice, and often charge Medicare and Medicaid for these visits 
and prescriptions.   
  To highlight best practices by providers and public sector employees who are 
dedicated to ending waste, fraud, and abuse in Medicare. 
  To build upon existing partnerships between DOJ and HHS, such as our Medicare 
Fraud Strike Force Teams, to reduce fraud and recover taxpayer dollars. 
Since its creation, HEAT has focused on key areas for coordination and improvement.  HEAT 
members are working to identify new enforcement initiatives and areas for increased oversight 
and prevention.  In 2017, DOJ formed an Opioid Fraud and Detection Unit and, in collaboration 
with HHS-OIG, selected twelve federal judicial districts to participate in the program.  In August 
2018, DOJ and HHS added a two additional Medicare Fraud Strike Forces in Newark and 
Philadelphia to combat health care fraud and illegal opioid prescriptions.  The end of FY2018 
also saw the preparation for the launch of the Appalachian Regional Prescription Opioid Strike 
Force (ARPO SF), which was announced by then-Attorney General Sessions on October 25, 
2018. ARPO operates in 9 federal districts: Southern District of Ohio, the Western District of 
Kentucky, the Eastern District of Kentucky, the Northern District of West Virginia, the Southern 
District of West Virginia, the Western District of Tennessee, the Middle District of Tennessee, 
the Eastern District of Tennessee and the Northern District of Alabama.  Its goal is to investigate 
and charge medical professionals with the illegal prescription of opioids.     
DOJ and HHS have expanded data-sharing and improved information-sharing procedures in 
order to get critical data and information into the hands of law enforcement to track patterns of 
fraud and abuse and increase efficiency in investigating and prosecuting complex health care 
fraud cases. This expanded data sharing enables the DOJ and HHS to efficiently identify and 
target the worst actors in the system. The departments established a cross-government health care 
fraud data intelligence sharing workgroup to share fraud trends, new initiatives, ideas, and 
success stories to improve awareness across issues relating to health care fraud.  
Both departments also have developed training programs to prevent honest mistakes and help 
stop potential fraud before it happens.  This includes CMS compliance training for providers, on-
going meetings at U.S. Attorneys Offices (USAOs) with the public and private sector, and 
increased efforts by HHS to educate specific groupsincluding elderly and immigrant 
communitiesto help protect them.  In addition, DOJ conducts, with the support of HHS, a 
Health Care Fraud training program designed to teach the Strike Force concept and case model 
11  to prosecutors, law enforcement agents, and administrative support teams.  In FY 2017, 
prescription opioid fraud and abuse training was also provided to the USAO community. 
Healthcare Fraud Prevention Partnership (HFPP) 
The Healthcare Fraud Prevention Partnership (HFPP) is a voluntary public/private partnership 
between the Federal Government, state agencies, law enforcement, private health insurance 
plans, employer organizations, and health care anti-fraud associations. The purpose of the 
partnership is to exchange data and information between the partners to help improve capabilities 
to fight fraud, waste, and abuse in the health care industry. The number of participants has 
increased to 112 public, private and state partner organizations at the end of FY 2018.   
The HFPP commenced or completed studies using multiple partners data to address fraud, waste 
and abuse in FY 2018, providing partners with detailed results that can be used for corrective 
actions within their organizations. The HFPP also released a public white paper on fraud and 
abuse in clinical laboratory services in May 2018 and continued its efforts to foster collaboration 
among partners by hosting four in-person information-sharing sessions and an Annual Executive 
Board meeting. These meetings were used to share fraud schemes and provider alerts, provide 
updates on law enforcement activities, and strategize on how to broaden the HFPPs impact in 
the private and public sectors. See HFPP section below for more information on HFPP activities 
Medicare Fraud Strike Force 
The first Medicare Fraud Strike Force (Strike Force) was launched in March 2007 as part of the 
South Florida Initiative, a joint investigative and prosecutorial effort against Medicare fraud and 
abuse in South Florida.  The Strike Force is comprised of interagency teams made up of 
investigators and prosecutors that focus on the worst offenders in regions with the highest known 
concentration of fraudulent activities.  The Strike Force uses advanced data analysis techniques 
to identify aberrant billing levels in health care fraud hot spotscities with high levels of billing 
fraudand target suspicious billing patterns, as well as emerging schemes and schemes that 
migrate from one community to another.  Based on the success of these efforts and increased 
appropriated funding for the HCFAC program from Congress and the Administration, DOJ and 
HHS now operate Medicare Fraud Strike Forces in fourteen strike forces, in 24 districts across 
the United States including Miami, Orlando, and Tampa, Florida; Los Angeles, California; 
Detroit, Michigan; Houston and Dallas, Texas; Brooklyn, New York; Baton Rouge and New 
Orleans, Louisiana; Chicago, Illinois; Newark, New Jersey; and Philadelphia, Pennsylvania, 
along with a Corporate Strike Force located in Washington, D.C.  The Newark/Philadelphia 
location was just added this fiscal year as part of the Newark/Philadelphia Regional Strike Force.  
FY 2019 will see the addition of two new ARPO strike forces covering 9 additional districts, 
based out of Nashville, Tennessee, and Fort Mitchell, Kentucky.     
Each Medicare Fraud Strike Force team brings the investigative and data analytic resources of 
the FBI and HHS-OIG and the prosecutorial resources of the Criminal Divisions Fraud Section 
and the USAOs to analyze data obtained from a wide variety of sources including CMS, and 
bring cases in federal district court.  Strike Force accomplishments in the areas noted above and 
12  USAO accomplishments in their districts during FY 2018 include12 
  Filed 313 indictments, informations and complaints involving charges filed against 600 
defendants who allegedly billed federal health care programs more than $2.6 billion; 
  Obtained 312 guilty pleas negotiated and 19 jury trials litigated, with guilty verdicts 
against 25 defendants; and  
  Secured imprisonment for 307 defendants sentenced, averaging more than 53 months of 
incarceration.  
Since its inception, Strike Force prosecutors filed more than 1,750 cases charging more than 
3,800 defendants who collectively billed the Medicare program approximately $15 billion; 2,643 
defendants pleaded guilty and 338 others were convicted in jury trials; and 2,424 defendants 
were sentenced to imprisonment for an average term of approximately 50 months.   Medicare 
payment trends demonstrate the positive impact of Strike Force enforcement and prevention 
efforts. 
Increased USAO outreach by the Strike Force partners is another positive measure that reflects 
the overall impact of the HCFAC program. This year, the Criminal Divisions Fraud Section 
hosted its largest ever National Health Care Fraud Training Conference, which was attended by 
360 criminal and civil (representing over 60 U.S. Attorneys Offices) and law enforcement 
personnel from FBI, DEA, HHS-OIG, IRS Criminal Investigation, and Defense Criminal 
Investigative Service (DCIS), U.S. Postal Service (USPS), and the Department of Veterans 
Affairs - OIG. The Fraud Sections Health Care Fraud Data Analytics Team and HHS-OIGs 
Consolidated Data Analysis Center have supported investigations, led trainings, and conducted 
analyses in over 50 districts, including the 12 districts selected for the Attorney Generals Opioid 
Fraud and Abuse Detection Unit initiative. 
In addition, the 2018 National Health Care Fraud Takedown involved more than 600 charged 
defendants across 58 federal districts with an estimated loss to federal health care programs of 
approximately $2 billion, including 165 doctors, nurses, and other licensed medical 
professionals.  The following chart shows the national health care fraud takedown trends from 
FY 2014 to FY 2018. 
                                                 
12 The accomplishments figures presented in the bullets include all reported Strike Force cases handled by DOJ 
13     
A review of the Part A and Part B CMS data shows that Medicare spending in Strike Force cities 
has decreased by hundreds of millions of dollars, which highlights the deterrent effect of 
prosecuting health care fraud, in addition to the monies recovered, and the monies prosecutions 
have prevented from going out the door.   
Opioid Fraud and Abuse Detection Unit 
In August FY 2017, the Attorney General announced the formation of the Opioid Fraud and 
Abuse Detection Unit, a new Department of Justice pilot program that utilizes data to help 
combat the devastating opioid crisis that is ravaging families and communities across America.  
This unit focuses specifically on opioid-related health care fraud using data to identify and 
prosecute individuals that are contributing to this prescription opioid epidemic. 
As part of the program, the Department has funded 12 experienced AUSAs for a three-year term 
who will work with dedicated HHS-OIG, FBI, and DEA investigators to focus solely on 
investigating and prosecuting health care fraud related to prescription opioids, including pill mill 
schemes and pharmacies that unlawfully divert or dispense prescription opioids for illegitimate 
purposes.  The following districts are participating in the program: Middle District of Florida, 
Eastern District of Michigan, Northern District of Alabama, Eastern District of Tennessee, 
District of Nevada, Eastern District of Kentucky, District of Maryland, Western District of 
Pennsylvania, Southern District of Ohio, Eastern District of California, Middle District of North 
Carolina, and Southern District of West Virginia.  This is in addition to the ARPO initiative, 
which launched at the beginning of FY 2019.    
14  Highlights of Significant Criminal and Civil Investigations 
Our respective Departments successfully pursued Medicare Fraud Strike Force matters, as well 
as other criminal and civil investigations in a wide range of areas.  Cases are organized by type 
and presented in chronological order.  Strike Force cases are denoted by (SF) before the lead 
sentence.  
Ambulance and Transportation Services 
In October 2017, three defendants in the District of Arizona were sentenced to 33 months, 24 
months, and 18 months in prison, respectively, and ordered to pay more than $3 million in 
restitution.  The Defendants falsely billed Arizonas Health Care Cost Containment System 
(AHCCCS) for tens of thousands of medical transports that never occurred, generating more than 
$3 million in fraudulent payments from AHCCCS.  AHCCCS is Arizonas Medicaid agency that 
offers health care programs to low-income Arizona residents.  The Defendants owned and 
operated Dine Transport, which purported to provide non-emergency medical transportation for 
AHCCCS recipients on the Navajo reservation.  Approximately 95 percent of the claims 
submitted by Dine Transport between March 2013 and July 2013 were false. 
In April 2018, the Quality Improvement Coordinator for Mauran Ambulance Inc. (Mauran) of 
San Fernando, California was sentenced to 36 months in prison.  Mauran was an ambulance 
transportation company operating in the greater Los Angeles area that provided non-emergency 
services to Medicare beneficiaries, many of whom were dialysis patients. As part of his plea, the 
Defendant admitted that between June 2011 and April 2012, he conspired with other Mauran 
employees to submit claims to Medicare for ambulance transportation services for individuals 
who did not need such services.  The Defendant also admitted that he and his co-conspirators 
instructed Mauran emergency medical technicians to conceal the patients true medical 
conditions by altering paperwork and creating fraudulent reasons to justify the ambulance 
services. 
In August 2018, East Texas Medical Center Regional Healthcare System, Inc. and East Texas 
Medical Center Regional Health Services, Inc. (together, ETMC), and their affiliated 
ambulance company, Paramedics Plus, LLC, agreed to pay $20.7 million to resolve civil FCA 
allegations that ETMC and Paramedics Plus offered kickbacks to Emergency Medical Services 
Authority (EMSA) aimed at securing a lucrative ambulance services contract in the state of 
Oklahoma.  EMSA, a quasi-municipal entity, separately agreed to pay $250,000 based on its 
ability to pay.  The former president and CEO of EMSA agreed to pay $80,000, also based on his 
ability to pay.  Of the over $21 million recovery, the defendants paid $2.9 million to resolve 
Oklahoma state Medicaid liability. 
In January 2018, AmeriCare Ambulance Service, Inc., and its sister company, AmeriCare ALS, 
Inc. (collectively, AmeriCare), agreed to pay $5.5 million to resolve civil FCA allegations that 
they defrauded Medicare by billing for medically unnecessary ambulance transportation services.  
From January 2008 through December 2016, AmeriCare allegedly submitted fraudulent claims 
to Medicare and TRICARE for Basic Life Support (BLS), nonemergency ambulance transports 
that were not medically justified.  AmeriCare had created thousands of false reports and other 
15  documentation during this time period in a failed effort to support this illicit practice.   
(SF) In April, June, July, and September 2018, the owner of an ambulance company, three 
employees, and an employee of a dialysis treatment center were sentenced for their roles in a 
scheme to submit claims to Medicare for unnecessary ambulance transportation services. The 
owner was sentenced to 46 months in prison and ordered to pay $3.1 million in restitution, 
jointly and severally with his co-defendants, after he pleaded guilty to one count of conspiracy to 
commit health care fraud.  The companys quality improvement coordinator received 36 months 
in prison.  The operations manager received 9 months in prison.  The dispatch supervisor was 
sentenced to three years of probation.  An administrator of a dialysis center who received 
kickbacks in exchange for patient referrals received 10 months in prison.  The defendants and 
their co-conspirators concealed Medicare beneficiaries true medical conditions at the time of 
transport by altering the requisite paperwork and creating fraudulent reasons to justify services.  
Medicare was fraudulently billed $6.6 million and paid $3.1 million on the false and fraudulent 
claims. 
Clinics 
In March 2018, the owner of a clinic and his coconspirator were sentenced in the Eastern District 
of North Carolina to 40 months and 30 months in prison, respectively for submitting fraudulent 
claims to Medicaid.  The clinic, Christian Medical Center, Inc., was a purported provider of 
outpatient behavioral services in eastern North Carolina.  In truth, Christian Medical was a shell 
company or false front with no legitimate business operations by this point.  Among other 
things, the conspirators purchased stolen Medicaid beneficiary information and used it to prepare 
and electronically file the fraudulent claims on Christian Medicals behalf through Medicaids 
NCTracks system. 
(SF) In April 2018, the owner of a home health clinic and two physical rehabilitation clinics was 
sentenced to 97 months in prison.  The co-owner of one of the clinics was sentenced to 120 
months in prison.  A patient recruiter was sentenced to 17 months in prison, and a man who 
helped money launder for the scheme was sentenced to 18 months in prison.  The defendants 
were ordered to pay over $4 million in restitution.  The defendants submitted approximately $10 
million in false and fraudulent claims to Medicare and Blue Cross Blue Shield. 
In June 2018, the CEO of a Texas clinic was sentenced in the Southern District of Texas to 233 
months in prison and ordered to pay more than $14 million in restitution.  According to 
testimony, the clinic submitted millions in false and fraudulent claims for physical therapy 
services.  Testimony from former employees revealed that the clinic had as many as 30  60 
patients a day and that employees did not know what the patients were doing in the main 
treatment area because they were busy in the back doing massages, electrical stimulation 
treatments and ultrasound treatments. 
In June 2018, Healogics, Inc. agreed to pay up to $22.5 million to settle civil FCA allegations 
that it knowingly caused wound care centers to bill Medicare for medically unnecessary services.  
Healogics, a Florida-based company, manages nearly 700 hospital-based wound care centers 
across the country.  Medicare covers hyperbaric oxygen therapy (HBO), a modality in which the 
16  entire body is exposed to oxygen under increased atmospheric pressure, as an adjunctive therapy 
to treat certain chronic wounds.  The settlement resolved allegations that from 2010 through 
2015, Healogics knowingly submitted or caused the submission of false claims to Medicare for 
medically unnecessary or unreasonable HBO therapy. 
Dental 
In January 2018, dental management company Benevis LLC (formerly known as NCDR LLC) 
and more than 130 of its affiliated Kool Smiles dental clinics, for which Benevis provides 
business management and administrative services, agreed to pay the United States $14.2 million 
to resolve civil FCA allegations that they knowingly submitted false claims for payment to state 
Medicaid programs for medically unnecessary dental services performed on children insured by 
Medicaid.  The United States alleged that between January 2009 and December 2011, Benevis 
and Kool Smiles clinics knowingly submitted false claims to state Medicaid programs for 
medically unnecessary pulpotomies (baby root canals), tooth extractions, and stainless steel 
crowns, in addition to seeking payment for pulpotomies that were never performed.  The United 
States alleged that Kool Smiles clinics routinely pressured and incentivized dentists to meet 
production goals through a system that disciplined unproductive dentists and awarded 
productive dentists with substantial cash bonuses based on the revenue generated by the 
procedures they performed.  In addition, the United States further alleged that Kool Smiles 
clinics located in Texas knowingly submitted false claims to the Texas Medicaid Program for 
First Dental Home, a program intended to provide a comprehensive package of dental services 
aimed at improving the oral health of children under three years of age.  In addition to the federal 
recovery, Kool Smiles paid $9.6 million to resolve state Medicaid liability.  
Device Companies 
In November 2017, the operators of a medical device company were sentenced in the Eastern 
District of Louisiana to 46 months and 25 months in prison, respectively, and ordered to pay 
more than $2.3 million in restitution in connection with a $38 million fraud scheme centering 
around the distribution of "talking glucose meters" that were not medically needed and were 
often not even requested.  The defendants operated Care Concepts, LLC (Care Concepts) and 
Choice Home Medical Equipment and Supplies (Choice).  According to court documents, the 
defendants paid kickbacks to workers at call centers in California and South Carolina, from 
which operators would cold-call Medicare recipients to convince them to accept talking glucose 
meters and related supplies.  From 2007 through 2015, the defendants caused thousands of 
claims to be submitted to Medicare through Care Concepts and Choice, virtually all of which 
were fraudulent. 
In March 2018, Massachusetts-based medical device manufacturer Alere, Inc. and its subsidiary 
Alere San Diego (collectively, Alere) agreed to pay the United States $28.3 million to resolve 
civil FCA allegations that Alere caused hospitals to submit false claims to federal health care 
programs by knowingly selling materially unreliable point-of-care diagnostic testing devices.  
The United States alleged that between January 2006 and March 2012, Alere knowingly sold 
such devices, which are intended to aid in the diagnosis of acute coronary syndromes, heart 
failure, drug overdose, and other serious conditions.  The devices were frequently used in 
17  emergency departments where timely decisions are critical to ensuring proper patient care.  
According to the governments allegations, Alere received complaints from health care providers 
that certain devices it sold produced erroneous results that had the potential to create false 
positives and false negatives that adversely affected clinical decision-making.  The company 
failed to take appropriate corrective actions until FDA inspections prompted a nationwide 
product recall in 2012.  In addition to the federal recovery, Alere paid $4.8 million to resolve 
state Medicaid liability.  
In July 2018, AngioDynamics, Inc., based in Latham, New York, agreed to pay the United States 
$10.9 million to resolve civil FCA allegations that the company caused healthcare providers to 
submit false claims to federal healthcare programs relating to the use of two medical devices 
LC Bead, which was FDA-cleared only for use as an embolization device, and the Perforator 
Vein Ablation Kit, which was FDA-cleared only for the treatment of superficial veins.  From 
May 2006 through December 2011, AngioDynamics served as the U.S. distributor for 
Biocompatibles plc, the manufacturer of LC Bead, and the government alleged that 
AngioDynamics marketed LC Bead for use as a drug-delivery device in combination with 
chemotherapy drugs.  AngioDynamics personnel routinely claimed that this particular use of LC 
Bead, which FDA had twice declined to approve, was better, superior, safer, and less 
toxic than alternative treatments, even though there was insufficient clinical evidence to support 
the truthfulness of these claims.  The government also alleged that AngioDynamics instructed 
healthcare providers to use inaccurate billing codes when submitting claims for such uses.  In 
addition to the federal recovery, AngioDynamics paid $600,000 to resolve state Medicaid 
liability. 
Diagnostic Services 
In January 2018, the U.S. District Court for the District of Delaware entered judgment in the 
amount of $16.2 million against Orthopaedic and Neuro Imaging LLC (ONI) for submitting false 
claims for Medicare reimbursement under the civil FCA.  Under the terms of the judgment, 
ONIs owner is jointly and severally liable for $6.1 million.  ONI operated independent 
diagnostic testing facilities in Delaware and Maryland.  The United States complaint alleged 
that ONI and its owner knowingly submitted false claims to Medicare by administering contrast 
dye during magnetic resonance imaging (MRI) scans on patients without proper supervision by a 
physician. Contrast dye is a chemical that is injected intravenously into the body to make certain 
tissues more clearly visible on an MRI. 
In March 2018, Natera, Inc., a California-based diagnostic company, agreed to pay more than 
$11 million dollars to resolve civil FCA allegations in the Western District of Kentucky that it 
improperly billed TRICARE for its test (including optional panels that screened for 
microdeletion syndromes). Further, during dates of service of January 1, 2013, through 
December 31, 2016, the defendant improperly billed TRICARE for non-invasive prenatal 
screening of certain microdeletion syndromes when TRICARE did not reimburse for this 
screening. During the same period, defendant improperly billed TRICARE, FEHBP, and 
Medicaid for its test and for its non-invasive prenatal screening of certain microdeletion 
syndromes, by using an improper code which misrepresented the services the company was 
billing to these programs. Lastly, during the same dates of service, the company billed 
18  TRICARE, FEHBP, and Medicaid for its test (including optional panels that screened for 
microdeletion syndromes) for patients with low-risk pregnancies. 
In May 2018, an individual was convicted of conspiracy to commit health care fraud and 
kickbacks, sentenced to 10 years in prison, and ordered to pay $9 million in restitution, joint and 
several.  The individual and his co-defendants engaged in a $13 million conspiracy to falsely bill 
Medicare and Medicaid for medically unnecessary diagnostic tests.  According to court 
documents, from January 2006 through July 2015, the individual ran several false clinics in 
Houston and Conroe, Texas. He paid marketers to bring patients to the clinics for a battery of 
diagnostic tests and blood work, regardless of medical need.  The individual paid the marketers 
approximately $100 for each patient brought to his clinics; in turn, the marketers paid the 
patients approximately $50 each.  The individual employed a physician who approved the testing 
and allowed his physician number to be used in the Medicare billing process to support the tests.  
Seven defendants involved in the scheme were previously sentenced to a combined 7 years 4 
months and 2 days in prison, and ordered to pay $5.5 million in restitution, joint and several.  
One additional defendant is awaiting sentencing.  This case was worked jointly with the FBI and 
MFCU. 
Drug Companies 
In December 2017, United Therapeutics Corporation (UT), based in Silver Spring, Maryland, 
agreed to pay $210 million to resolve civil FCA allegations in the District of Massachusetts that 
UT used a foundation, which claims 501(c)(3) status for tax purposes, as a conduit to pay the co-
pay obligations of thousands of Medicare patients taking its pulmonary arterial hypertension 
(PAH) drugs.  The settlement resolved allegations that, from 2010 to 2014, UT violated the FCA 
by paying kickbacks to Medicare patients through donations it made to Caring Voice Coalition 
(CVC).  CVC, in turn, allegedly used the donations to pay copayments for patients in order to 
induce the patients to use UT's drugs.  The government alleged that UT routinely obtained data 
from CVC detailing how much CVC spent for patients who were using UT's drugs and that UT 
used this data to decide how much money to donate to CVC.  Essentially, the government 
alleged that UT used CVC as a conduit to pay the copayments of Medicare patients who were 
using UT's drugs.  As part of the resolution, UT entered a 5-year Corporate Integrity Agreement 
(CIA) with OIG. 
In April 2018, Canada Drugs and certain affiliated entities were sentenced in the District of 
Montana to forfeit $29 million, to pay a fine of $5 million, and to five years of probation.  The 
companys CEO was sentenced individually to pay a fine of $250,000 and to five years of 
probation with the first six months in home confinement.  The sentencing stemmed from the 
companys practice of shipping to health care providers in the United States prescription drugs 
that were unapproved in the United States, labelled with foreign languages, and that lacked 
adequate instructions for use.  Further investigation revealed that various entities affiliated with 
Canada Drugs were smuggling unapproved and misbranded drugs intended for sale in foreign 
countries into the United States, including for sale to providers in Montana.  To facilitate its 
sales, Canada Drugs purchased other companies engaged in this business and used the brand 
names, drug inventories, and customer lists of those companies to further its illegal 
19  operations.  In order to avoid detection, Canada Drugs and its affiliated companies falsified 
customs forms concerning the value of the drugs shipped into the United States.  
In May 2018, Pfizer Inc. (Pfizer) agreed to pay more than $23.85 million to resolve civil FCA 
allegations associated with donations it made to a 501(c)(3) foundation, which operated funds 
that pay the copayments of certain patients, including Medicare patients.  Specifically, Pfizer 
resolved allegations that, from 2012 through 2016, it used the foundation as a conduit to pay the 
copayments of Medicare patients taking Sutent, Inlyta, and Tikosyn, in violation of the Anti-
Kickback Statute.  As part of the resolution, Pfizer entered into a 5-year CIA with provisions 
relating to arrangements and interactions between Pfizer and any third party patient assistance 
program to which Pfizer donates.  The CIA also requires Pfizer to implement controls and 
monitoring designed to promote true independence from any patient assistance program to which 
it donates. 
Drug Distributor 
In September 2018, AmerisourceBergen Corporation and its subsidiaries AmerisourceBergen 
Specialty Group (ABSG), AmerisourceBergen Drug Corporation (ABDC), Oncology Supply 
Company (OSC), and Medical Initiatives Inc. (MII) (collectively, ABC)  paid $581.8 million 
to resolve civil FCA allegations that it improperly repackaged oncology-supportive injectable 
drugs into pre-filled syringes and then distributed those syringes to physicians treating vulnerable 
cancer patients.  The United States alleged that ABC sought to profit from the excess drug 
product or overfill contained within the original FDA-approved sterile vials for these drugs by 
establishing a pre-filled syringe program through a subsidiary that it claimed was a pharmacy.  
As part of this operation, ABC purchased original vials from their respective manufacturers, 
broke their sterility, pooled the contents, and repackaged the drugs into pre-filled syringes.  The 
United States alleged that ABC never submitted any safety, stability, or sterility data to the FDA 
to show that its operation ensured the safety and efficacy of the repackaged drug products.  It 
further alleged that, at times, these pre-filled syringes were prepared in non-sterile conditions, 
contaminated with bacteria and other unknown particles, and lacked the required quality and 
purity.  In addition, by harvesting the overfill, ABC was able to create more doses than it bought 
from the original vial manufacturers.  The United States alleged that ABCs scheme enabled it to 
bill federal health care programs for the same vial more than once.  The settlement also resolves 
allegations that ABC gave kickbacks in the form of general pharmacy credits to physicians to 
induce them to purchase a drug through the pre-filled syringe program.  In addition to the federal 
recovery, ABC agreed to pay $43.2 million to resolve state Medicaid liability.       
Durable Medical Equipment (DME) 
In November 2017, two individuals were convicted of conspiracy to commit health care fraud for 
their role in directing a $38 million Medicare fraud scheme.  The defendants operated Care 
Concepts, LLC and Choice Home Medical Equipment and Supplies.  According to court 
documents, the defendants paid kickbacks to workers at call centers from which operators would 
cold-call Medicare recipients to convince them to accept talking glucose meters and related 
supplies.  From 2007 through 2015, the defendants caused thousands of claims to be submitted to 
Medicare, virtually all of which were fraudulent.  One individual was sentenced to 3 years and 
20  10 months in prison and ordered to pay $1.3 million in restitution, while the other individual was 
sentenced to 2 years and 1 month in prison and ordered to pay $988,593 in restitution.  Two 
defendants involved in the scheme were previously sentenced to a combined 1 year and 1 day in 
prison and ordered to pay $133,807 in restitution. 
In April 2018, Rotech Healthcare Inc., a Florida-based respiratory equipment supplier, agreed to 
pay $9.7 million to resolve civil FCA allegations by knowingly submitting false claims for 
portable oxygen contents to Medicare.  Medicare covers rentals of portable and stationary 
oxygen equipment for up to 36 months and allows suppliers to bill monthly for oxygen to be 
used with that equipment for up to 24 additional months after the rental period.  Between 
January 2009 and March 2012, the United States alleged that the company automatically billed 
Medicare for portable oxygen contents for all Medicare beneficiaries after the 36-month rental 
period, without verifying that the beneficiaries used or needed portable oxygen, and without 
obtaining the requisite proof of delivery.  The company continued this practice despite knowing 
that it resulted in the submission of claims for portable oxygen contents that were ineligible for 
reimbursement. 
In August 2018, Lincare, Inc., a durable medical equipment company headquartered in 
Clearwater, Florida, agreed to pay more than $5 million to resolve civil FCA allegations in the 
Southern District of Illinois that it violated the Anti-Kickback Statute.  The government alleged 
that, from 2011 to 2017, the company attempted to gain a competitive advantage in the 
marketplace by unlawfully waiving or reducing co-insurance, co-payments, and deductibles for 
beneficiaries who participated in a Medicare Advantage Plan operated through a private insurer. 
The government alleged that the companys practices violated the Anti-Kickback Statute, and 
further caused the submission of false claims for payments to Medicare. 
(SF) In September 2018, the vice president of a number of medical device companies pleaded 
guilty to conspiracy to commit health care fraud, mail fraud, and wire fraud for his role as the 
leader of a scheme to defraud Medicare Part D pursuant to a Rule 11(c)(1)(C) plea agreement, 
which was provisionally accepted by the court and which includes a term of 60 months 
imprisonment and restitution of $1.6 million.  The defendant impersonated his brother as the 
owner of a then-defunct pharmacy and billed Medicare Part D for prescriptions for himself, his 
wife, and his two brothers, though the prescriptions were never actually ordered or 
dispensed.  The defendants wife also pleaded guilty to one count of health care false statements 
for her role in the scheme. 
Electronic Health Records 
In December 2017, 21st Century Oncology Inc. (21st Century), which is headquartered in Fort 
Myers, Florida, and certain of its subsidiaries and affiliates, agreed to pay $26 million to resolve 
claims in the Middle District of Florida related to its use of Electronic Health Records (EHR) 
systems.  The settlement resolved conduct that was self-disclosed by the company regarding 
payments made by the government as part of the Medicare EHR Incentive Program.  Under the 
Program, physicians who attest to their meaningful use of certified EHR technology may receive 
incentive payments and avoid downward adjustments to certain Medicare claims.  As part of its 
self-disclosure, 21st Century reported that it knowingly submitted, or caused the submission of,
21  false attestations to CMS concerning employed physicians use of EHR software.  The company 
further reported that, in support of the attestations, its employees falsified data regarding the 
companys use of EHR software, fabricated software utilization reports, and superimposed EHR 
vendor logos onto the reports to make them look legitimate.  The settlement also resolved civil 
FCA allegations that 21st Century submitted, or caused the submission of, claims for certain 
services provided pursuant to referrals from physicians with whom they had improper financial 
relationships in violation of the Stark Law. 
Managed Care 
(SF) In November 2017, a former HMO executive was sentenced in the Middle District of 
Florida to 6 months in prison, followed by a three-year term of supervised release that includes 
one year of home confinement, for making a false statement to the Florida Medicaid Program. 
The Court also ordered him to pay a $50,000 fine.  The sentence stemmed from allegations that 
the HMO, under the direction of the executive and others, engaged in healthcare fraud. The fraud 
counts alleged that the executive and his co-defendants had executed and attempted to execute 
both a scheme to defraud the Florida Medicaid Program through Floridas Agency for Health 
Care Administration (AHCA), and a scheme to obtain, by means of false and fraudulent 
pretenses and representations, money under the custody or control of the program. 
In August 2018, two individuals and a corporation they owned in the Eastern District of 
Louisiana were indicted in connection with the operation of a multiple employer welfare 
arrangement.  The indictment alleged fraud and false statements in the marketing and sale of 
group health care coverage by the MEWA causing losses exceeding $41 million. The scheme 
involved the sale of health care coverage to employers based upon false representations that the 
health plan was funded by a loan arrangement which would greatly lower the employers and 
their contributing employees taxable income.  In fact, there was no loan arrangement and no 
participant contributions.  The defendants collected more than $21 million in fees from 
employers and contributing employees.  In addition, the defendants caused at least $20 million in 
federal FICA taxes to be underpaid as well as a significant amount of personal income taxes, 
amounts for which the employer-clients and employee-participants may be individually 
responsible. 
In September 2018, HealthCare Partners Holdings LLC, doing business as DaVita Medical 
Holdings LLC (DaVita), agreed to pay $270 million to resolve civil FCA liability that it provided 
inaccurate information that caused Medicare Advantage Organizations (MAOs) to receive 
inflated Medicare payments.  The settlement resolved voluntary disclosures made by DaVita of 
various practices that were instituted by HealthCare Partners, a large California-based 
independent physician association that DaVita acquired in 2012, that caused MAOs  to submit 
incorrect diagnosis codes to CMS and obtain inflated payments in which DaVita and HealthCare 
Partners shared.  For example, HealthCare Partners disseminated improper medical coding 
guidance instructing its physicians to use an improper diagnosis code for a particular spinal 
condition that yielded increased payments from CMS.  The settlement also resolved allegations 
made by a whistleblower that HealthCare Partners engaged in one-way chart reviews in which 
it scoured its patients medical records for diagnoses its providers may have failed to record.  It 
then submitted these missed diagnoses to MAOs to be used by them in obtaining increased 
22  Medicare payments.  At the same time, it ignored inaccurate diagnosis codes that should have 
been deleted and that would have decreased Medicare payment or required the MAOs to repay 
money to Medicare. DaVita is headquartered in El Segundo, California. 
Home Health Providers 
In November 2017, the co-owner and operator of two home health agencies, was convicted of 
conspiracy to commit health care fraud.  The owner and operator was sentenced to 6 years and 8 
months in prison, and ordered to pay restitution of $45 million, joint and several, for her 
participation in an elaborate health care fraud scheme.  According to court documents, from 
January 2006 through June 2012, the owner and her co-defendants enlisted and paid patient 
recruiters kickbacks and bribes in exchange for the referral of Medicare beneficiaries to the two 
home health agencies to receive home health and physical therapy services that were not 
medically necessary, not provided, or both.  Two additional defendants involved in the scheme 
were previously sentenced to a combined 11 years and 8 months in prison and ordered to pay a 
portion of the $45 million in restitution, as well as an additional $27 million in restitution.  
(SF) In November 2017, a registered nurse was sentenced to 120 months in prison and ordered to 
pay $17.1 million in restitution. The registered nurse and his co-conspirators were involved in a 
scheme to recruit patients to receive home health services that were not medically necessary, not 
provided, or both.  The registered nurse also paid kickbacks to physicians who would falsely 
certify in a plan of care that the Medicare beneficiaries were under their care and confined to the 
home when they were not. The registered nurse pled guilty in April 2017.  
(SF) In December 2017, the owner of a home health agency was sentenced in absentia to 
80 years in prison after pleading guilty for his role in a $13 million dollar Medicare fraud scheme 
and for filing false tax returns.  His wife and co-owner was sentenced to 75 years in prison 
following a jury trial.  The owners and their co-conspirators paid kickbacks to patient recruiters 
for referring Medicare beneficiaries to the home health agency and to beneficiaries for allowing 
the home health agency to bill Medicare.  The owner falsified medical records and directed 
others to falsify records to make it appear as though the Medicare beneficiaries qualified for and 
received home health services when the beneficiaries did not.  Three other defendants pleaded 
guilty or were convicted based on their roles at the home health agency.  A physician was 
sentenced to time served with three years of home confinement.  Two patient recruiters were 
sentenced to time served with three years of supervised release and 33 months in prison, 
respectively. 
In December 2017, five co-conspirators were convicted of charges resulting from their 
involvement in a scheme to defraud Medicare.  In all, they were sentenced to a combined 13 
years and 7 months in prison, and ordered to pay $27.5 million in restitution, joint and several.  
The defendants conspired to operate multiple fraudulent home health care agencies and a rehab 
facility.  According to court documents, from about January 2010 through about May 2015, the 
defendants were involved in a scheme to recruit patients to receive unnecessary home health 
visits.  Specifically, the defendants paid kickbacks and bribes to patient recruiters in exchange 
for the referrals of Medicare beneficiaries to serve as patients at the home health care agencies, 
which then billed Medicare for services that were not medically necessary, not provided, or both.  
23  The defendants also paid kickbacks and bribes for home health prescriptions and plans of care, 
which falsely represented that Medicare beneficiaries qualified for home health services when, in 
fact, they did not.  Three defendants involved in the scheme were previously sentenced to a 
combined 13 years and 9 months in prison and ordered to pay $34.2 million in restitution, joint 
and several.  One additional defendant is a fugitive in Cuba.  
(SF) In February 2018, the owner of more than twenty home health agencies was sentenced to 
240 months in prison and ordered to pay $66.4 million in restitution, jointly and severally with 
his co-defendants, after pleading guilty to one count of conspiracy to commit health care fraud 
and wire fraud.  A patient recruiter for the home health agencies, who also owned a medical 
clinic and two home health agencies of her own, was sentenced to 180 months in prison.  
Another patient recruiter, who also was the owner of two home health agencies, was sentenced 
to 115 months in prison. A Miami man who helped launder the proceeds of the scheme was 
sentenced to 71 months in prison.  The defendants and their co-conspirators paid illegal bribes 
and kickbacks to patient recruiters in return for the referral of Medicare beneficiaries, many of 
whom did not need or qualify for home health services to these agencies.  Medicare paid 
approximately $66 million on those claims. 
(SF) In August and September 2018, two physicians and the owner of a home health agency 
were each sentenced on multiple counts of conspiracy and health care fraud and ordered to pay 
$6.5 million in restitution.  One physician was sentenced to 132 months in prison following trial.  
A physician who pled guilty was sentenced to 27 months in prison following a guilty plea.  The 
home health agency owner was sentenced to 42 months in prison.  A fourth defendant, the owner 
of a physician clinic, has yet to be sentenced after a guilty plea.  The defendants paid and 
received kickbacks in exchange for patients and billed Medicare more than $8.9 million for 
services that were medically unnecessary, never provided, and/or not otherwise reimbursable.  
Additionally, certain defendants provided prescriptions for opioid medications to induce patient 
participation in the scheme.  
(SF)  In September 2018, the co-owner and administrator of a home health agency was sentenced 
to 24 months in prison, ordered to pay over $2.2 million in restitution, and ordered to forfeit over 
$1.1 million.  Her co-owner is scheduled to be sentenced in November 2018.  The co-owners 
participated in a health care fraud conspiracy that resulted in Medicare paying at least $2.2 
million on false and fraudulent claims.  The owners and their co-conspirators paid kickbacks to 
doctors and patient recruiters in exchange for patient referrals, billed Medicare for services that 
were medically unnecessary, and caused patient files to be falsified to justify the fraudulent 
billing.  Five other co-defendants are scheduled to be sentenced from October through December 
2018. 
Hospice Care 
In October 2017, Vitas Hospice Services LLC, Vitas Healthcare Corporation, and corporate 
parent Chemed Corporation (collectively, Vitas) agreed to pay $75 million to resolve civil 
FCA allegations that Vitas submitted false claims for hospice services to Medicare.  The 
settlement resolved allegations that between 2002 and 2013 Vitas knowingly submitted or caused 
to be submitted false claims to Medicare for services to hospice patients who were not terminally 
24  ill and for continuous home care services that were not necessary, not actually provided, or not 
performed in accordance with Medicare requirements.  This settlement represents the largest-
ever FCA recovery with a hospice provider.  Vitas also paid $500,000 to Illinois to resolve state 
FCA allegations pertaining to the Illinois Medicaid program.
In June 2018, Caris Healthcare LLC and Caris Healthcare, L.P. (collectively, Caris), a for-
profit hospice chain, agreed to pay $8.5 million to resolve civil FCA allegations in the Eastern 
District of Tennessee that it admitted and recertified patients for hospice care that were ineligible 
for the hospice benefit.  The governments complaint alleged that, in an effort to meet the 
aggressive admissions and census targets set by the company, Caris admitted patients whose 
medical records did not support a terminal prognosis.  The governments complaint further 
alleged that when Caris was alerted to the ineligibility of these patients  via internal audits, 
concerns raised by its Chief Medical Officer, and recommendations of its nurse employees who 
actually examined the patients  Caris not only continued to submit hospice claims to Medicare 
for the patients, but also took no meaningful action to determine whether it had previously 
received improper payments for these and other patients that should have been returned to 
Medicare. 
Hospitals and Health Systems 
In December 2017, EmCare, Inc., a Dallas-based subdivision of Envision Healthcare 
Corporation that provides physicians to hospitals to staff their Emergency Departments, agreed 
to pay $29.8 million to resolve civil FCA allegations that, from 2008 to 2012, EmCare received 
remuneration from Health Management Associates (HMA), formerly a U.S. hospital chain 
headquartered in Naples, Florida, to increase Medicare admissions at HMA hospitals by 
recommending admission for patients whose medical care should have been billed as outpatient 
or observation services.  These recommendations allegedly caused the medically unnecessary 
admission of Medicare beneficiaries. 
In August 2018, William Beaumont Hospital, a regional hospital system based in the Detroit, 
Michigan area, agreed to pay $82.7 million to resolve civil FCA allegations that it had improper 
relationships with eight referring physicians, resulting in the submission of false claims to the 
Medicare, Medicaid, and TRICARE programs.  The settlement resolves allegations that between 
2004 and 2012, Beaumont provided compensation substantially in excess of fair market value 
and free or below-fair market value office space and employees to certain physicians to secure 
their referrals of patients in violation of the Anti-Kickback Statute and the Stark Law.  The 
settlement also resolves claims that Beaumont allegedly misrepresented that a CT radiology 
center qualified as an outpatient department of Beaumont in claims to federal health care 
programs.  In addition to the federal recovery, Beaumont paid $1.8 million to Michigan resolve 
state Medicaid liability.  
In August 2018, California-based Prime Healthcare Services, Inc., Prime Healthcare Foundation, 
Inc., and Prime Healthcare Management, Inc. (collectively Prime), and Primes Founder and 
Chief Executive Officer agreed to pay the United States $65 million to resolve civil FCA 
allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare 
by admitting patients who required only less costly, outpatient care and by billing for more 
25  expensive patient diagnoses than the patients had (a practice known as up-coding). Under the 
settlement agreement, Primes Founder and CEO agreed to pay $3,250,000 and Prime agreed to 
pay $61,750,000.  The settlement resolved allegations that from 2006 through 2013, Prime 
engaged in a deliberate corporate-driven scheme to increase inpatient admissions of Medicare 
beneficiaries who originally presented to the emergency departments at 14 Prime hospitals in 
California.  The government claimed that the inpatient admission of these beneficiaries was not 
medically necessary because their symptoms and treatment needs should have been managed in a 
less costly outpatient or observation setting. The settlement also resolved allegations that, from 
2006 through 2014, Prime engaged in up-coding by falsifying information concerning patient 
diagnoses, including complications and comorbidities, in order to increase Medicare 
reimbursement. 
In September 2018, Kalispell Regional Healthcare along with six subsidiaries and related entities 
 Kalispell  Regional Medical Center, HealthCenter Northwest LLC, Flathead Physicians Group 
LLC, Northwest Horizons LLC, Northwest Orthopedics & Sports Medicine LLC, and Applied 
Health Services Inc. (collectively, KRH entities)  agreed to pay $24 million to resolve 
allegations that they violated the civil FCA by paying physicians more than fair market value, 
and by conspiring to enter into arrangements that improperly induced referrals.  Between 2010 
and 2018, the KRH entities allegedly violated the Stark Law by paying excessive full-time 
compensation to more than 60 physician specialists  many of whom worked far less than full-
time.  Additionally, the United States alleged that several of the KRH entities paid excessive 
compensation to physicians and provided administrative services at below fair market value to 
induce referrals in violation of the Anti-Kickback Statute. 
In September 2018, Health Management Associates, LLC (HMA), formerly a U.S. hospital chain 
headquartered in Naples, Florida, agreed to pay over $260 million to resolve criminal charges 
and civil claims relating to a scheme to defraud the United States.  The government alleged that 
HMA knowingly billed government health care programs for inpatient services that should have 
been billed as outpatient or observation services, paid remuneration to physicians in return for 
patient referrals, and submitted inflated claims for emergency department facility fees.  As part 
of the criminal resolution, HMA entered into a three-year Non-Prosecution Agreement (NPA) 
with the Criminal Divisions Fraud Section, through its Corporate Strike Force, in connection 
with a corporate-driven scheme to defraud Federal health care programs by unlawfully 
pressuring and inducing physicians serving HMA hospitals to increase the number of emergency 
department patient admissions without regard to whether the admissions were medically 
necessary.  The scheme involved HMA hospitals billing and obtaining reimbursement for higher-
paying inpatient hospital care, as opposed to observation or outpatient care, from federal health 
care programs, increasing HMAs revenue.  Under the terms of the NPA, HMA will pay a $35 
million monetary penalty.  In addition, an HMA subsidiary, Carlisle HMA, LLC, formerly doing 
business as Carlisle Regional Medical Center, agreed to plead guilty to one count of conspiracy 
to commit health care fraud.  HMA also agreed to pay $216 million as part of a related civil 
settlement which resolved civil FCA allegations that HMA admitted patients to hospitals who 
required only less costly, outpatient care; billed federal health care programs for services referred 
by physicians to whom HMA provided remuneration in return for patient referrals; billed federal 
health care programs for services referred by physicians with whom the facilities had improper 
financial relationships; leased space to a physician at a below-market rent; and sought 
26  reimbursement for falsely inflated emergency department facility charges.  Of the $223.5 million 
that HMA agreed to pay to resolve the civil allegations, $7.2 million was paid to certain states to 
resolve state Medicaid liability. 
Identity Theft 
In October 2017, an individual was convicted of health care fraud, making false statements 
regarding health care fraud, and aggravated identity theft for his role in a sophisticated scheme to 
defraud Medicare by committing identity theft.  According to the investigation, the individual 
stole the identities of five retired and semi-retired physicians along with their Medicare provider 
numbers used to submit claims for services provided to patients.  The individual utilized fake 
passports, drivers licenses, and other identification documents to establish bank accounts, 
mailing addresses, and phone answering services in the names of the victim physicians to give 
the appearance that the physicians were in practice and providing medical care to deceased 
beneficiaries in different locations around the country.  From June 2011 through December 2016, 
the individual submitted fraudulent claims to Medicare for purportedly providing medical 
services.  The individual had the money paid by Medicare deposited into the bank accounts he 
controlled in the victim doctors names.  The doctors, as a result of the individuals crimes, 
received bills from the IRS for unpaid taxes and from Medicare for repayment of the apparently 
fraudulent claims.  The individual was sentenced to 13 years and 5 months in prison and ordered 
to pay $1.6 million in restitution. 
Laboratories 
In December 2017 Primex Clinical Laboratories, LLC (Primex) and the CEO and owner of DNA 
Stat, LLC (DNA Stat) agreed to pay $3.5 million and $270,000, respectively, to resolve civil 
FCA allegations that they paid kickbacks in exchange for laboratory referrals for patient 
pharmacogenetic testing.  Primex is a licensed clinical laboratory providing clinical diagnostic 
testing services, including pharmacogenetic testing.  DNA Stat was a laboratory management 
company that employed sales representatives and licensed pharmacists.  Primex and DNA Stat 
entered into a services agreement related to pharmacogenetic testing services.  From June 2013 
through March 2016, Primex and DNA Stat allegedly were involved in several kickback 
schemes, including a scheme where the defendants created the appearance of paying physicians 
to provide clinical study data for a Primex-sponsored study related to pharmacogenetic testing 
when, in fact, the physicians were being paid for referring patients for the testing.  Primex and 
DNA Stat also allegedly provided physicians with in-office medical technicians to do work 
related to the Primex-sponsored study in an effort to induce those physicians to order 
pharmacogenetic tests from Primex.   
In May 2018, the United States District Court in the District of South Carolina entered judgment 
for the United States in the amounts of $111.1 million against the former CEO of Health 
Diagnostics Laboratory Inc. (HDL) and two individuals who marketed tests for HDL and 
Singulex, Inc., and for an additional $3 million against the two marketers.  HDL was a blood 
testing laboratory based in Richmond, Virginia; Singulex is based in Alameda, California.  The 
judgment followed the January 31, 2018, jury verdict finding the three individuals liable for 
violating the civil FCA by paying remuneration to physicians in exchange for patient referrals, in 
27  violation of the Anti-Kickback Statute, and causing the two laboratories to bill Medicare and 
TRICARE for medically unnecessary testing.  During a two-and-a-half week jury trial held in 
Charleston, South Carolina, the government introduced evidence that the defendants paid 
physicians remuneration disguised as processing and handling fees for each patient they 
referred to HDL and Singulex.  The government also introduced evidence that the kickback 
scheme induced physicians to refer patients to HDL and Singulex for medically unnecessary 
tests, which were then billed to Medicare and TRICARE. 
Nursing Homes and Facilities 
In October 2017, Catholic Health System, Inc., Home & Community Based Care (Catholic 
Health) agreed to pay $6 million to resolve civil FCA allegations that it knowingly caused false 
claims to be submitted to Medicare.  Catholic Health operated and provided long-and short-term 
skilled nursing care and post-acute care to seniors at Father Baker Manor, the McAuley 
Residence, and St. Frances Williamsville (collectively described herein as the Subject 
Facilities).  The agreement resolves allegations that between January 1, 2007, and December 
31, 2014, Catholic Health submitted, or caused to be submitted, false claims to Medicare for 
rehabilitation therapy services at the Ultra High Resource Utilization Group level it administered 
to beneficiaries that were unreasonable, not medically necessary, and unsupported by the medical 
records at its Subject Facilities.  As part of the resolution, Catholic Health agreed to enter into a 
5-year CIA to resolve its liability. 
In June 2018, Signature Healthcare, LLC (Signature), a company that operates approximately 
115 skilled nursing facilities, agreed to pay $30 million to resolve civil FCA allegations 
associated with its submission of false claims to Medicare for unnecessary rehabilitation therapy.  
Specifically, the settlement agreement resolves allegations that, from January 1, 2011, through 
September 30, 2015, Signature billed the highest reimbursement level (Ultra High Resource 
Utilization Group) for patients for periods exceeding 30 days.  Signatures corporate policies and 
practices allegedly encouraged the provision of unnecessary therapy untethered to the individual 
clinical needs of patients.  Additionally, the settlement agreement resolves allegations that, from 
January 1, 2011 and June 1, 2013, Signature improperly submitted Pre-admission Evaluation 
Certifications that were photocopied or had forged physician signatures in order to illegally 
obtain reimbursement from Tennessees Medicaid program.  As part of the resolution, Signature 
agreed to enter into a company-wide 5-year CIA.   
Pharmacies 
In December 2017, DaVita Rx, LLC (DaVita Rx), a nationwide pharmacy that specializes in 
serving patients with severe kidney disease, entered into a settlement agreement to resolve 
allegations that it billed Federal health care programs for prescription medications that were 
never shipped, that were shipped but subsequently returned, and that did not comply with 
requirements for documentation of proof of delivery, refill requests, or patient consent.  In 
addition, the settlement also resolves allegations that DaVita Rx paid financial inducements to 
Federal health care program beneficiaries in violation of the anti-kickback statute.  Specifically, 
DaVita Rx allegedly accepted manufacturer copayment discount cards in lieu of collecting 
copayments from Medicare beneficiaries, routinely wrote off unpaid beneficiary debt, and 
28  extended discounts to beneficiaries who paid for their medications by credit card.  These 
allegations relating to improper billing and unlawful financial inducements were the subject of 
self-disclosures by DaVita Rx and a subsequently filed whistleblower lawsuit.  DaVita Rx repaid 
approximately $22.2 million to federal healthcare programs following a self-disclosure and 
agreed to pay an additional $38.3 million to the United States as part of the settlement 
agreement.  In addition to the federal recovery, DaVita Rx paid $3.2 million to resolve state 
Medicaid liability. 
In December 2017, Kmart Corporation, a wholly owned subsidiary of Sears Holdings 
Corporation, agreed to pay $32.3 million to the United States to settle civil FCA allegations that 
in-store pharmacies in Kmart stores failed to report discounted prescription drug prices to 
Medicare Part D, Medicaid, and TRICARE.  In addition to the federal recovery, Kmart agreed to 
pay $9.8 million to resolve state Medicaid and insurance liability.  
(SF) In January 2018, a pharmacy owner, a physician, and a patient recruiter were convicted at 
trial for their involvement in a kickback scheme.  The doctor and other co-conspirators 
prescribed expensive pain and scar creams costing up to $17,000 per bottle in return for kickback 
payments.  The pharmacy owner then billed TRICARE for the medically-unnecessary pain and 
scar creams, and TRICARE paid approximately $4.3 million on the claims.  The pharmacy 
owner was sentenced to 13 years in prison and ordered to forfeit approximately $340,000 worth 
of real property and two cashiers checks worth $25,000 each.  The patient recruiter was 
sentenced to 2 years.  The physician was sentenced to 3 years of probation, which is currently 
being appealed by the United States. 
(SF) In August 2018, the owner and the pharmacist-in-charge of a Mississippi compounding 
pharmacy pleaded guilty to one count of conspiracy to commit health care fraud. The pharmacy 
received approximately $240 million in reimbursements from TRICARE and other health care 
benefit programs for dispensing compounded medications that were medically unnecessary and 
ineffective.  The pharmacist and his co-conspirators selected formulas for compounded 
medications based on reimbursement rates rather than medical efficacy.  They also failed to 
collect beneficiary copayments and paid copayments on behalf of beneficiaries.  More than 
$29 million has been seized and is being forfeited to the United States.  The pharmacist is 
scheduled to be sentenced in October 2018.  
(SF) Between December 2017 and April 2018, seven individuals were sentenced for their roles 
in a $150 million compounding pharmacy fraud scheme.  From approximately October 2012 
through December 2015, the co-conspirators manipulated billing codes and submitted claims for 
pharmaceutical ingredients they did not have, chiefly for compounded pain creams and scar 
creams, to private insurance companies, Medicare, and TRICARE.  They also paid kickbacks 
and bribes in exchange for prescriptions and patient identifying information to further the 
scheme.  The pharmacies submitted approximately $633 million in claims for compounded 
medications and received approximately $157 million on the claims. The president and owner of 
a pharmacy was sentenced to 15 years in prison and ordered to pay $54 million in 
restitution.  His seven co-defendants were sentenced to between 1 year and a day and 66 months 
in prison.  The defendants also were ordered to forfeit a combined equity of over $7.6 million in 
the real properties, cars, and boats.  
29  Physical Therapy 
(SF) In February, March, and July 2018, six defendants were sentenced after pleading guilty to 
various charges, including conspiracy to commit health care fraud and conspiracy to commit 
money laundering, in connection with a scheme to submit false claims to Medicare and Medicaid 
for fraudulent health services, including physical and occupational therapy services. A medical 
biller was sentenced to 18 months in prison.  A therapist manager was sentenced to 36 months in 
prison.  An officer worker at the clinic was sentenced to 18 months in prison.  The three agreed 
to pay a total of over $17 million in restitution.  The operator and manager of a Brooklyn clinic, 
who also served as an ambulette driver and the president and owner of purported management 
companies used to launder approximately $1.8 million to pay kickbacks to patients, was 
sentenced to 46 months in prison followed by 3 years of supervised release and order to pay $1.8 
million in restitution.  Two co-owners of Brooklyn-area medical clinics were each sentenced to a 
year in prison and ordered to pay $1.1 million in restitution.  The owners were ordered to pay 
$151,000 and $115,000 in restitution respectively.  From 2008 through 2011, the defendants and 
others executed falsified patient charts and medical billing documents.  They paid patient 
recruiters and patients cash kickbacks to receive treatment, including physical and occupational 
therapy.  The defendants billed Medicare and Medicaid over $55 million and were paid over $26 
million for medically unnecessary treatments.  Together with these defendants, over 20 
individuals have pled guilty for their participation in similar schemes perpetrated at these and 
other clinics.   
In July 2018, Southern SNF Management, Inc., Rehab Services in Motion d/b/a Dynamic Rehab 
and nine affiliated skilled nursing facilities in Florida and Alabama agreed to pay $10 million to 
resolve civil FCA allegations that they submitted or caused the submission of false claims to 
Medicare for medically unnecessary rehabilitation therapy services.  The United States alleged 
that between October 2009 and December 2013, Southern SNF, Dynamic Rehab and the nine 
skilled nursing facilities corporate policies and practices encouraged the provision of medically 
unreasonable and unnecessary therapy without regard for patients individual clinical needs.   
Physician and Other Practitioners 
(SF) In February 2018, a surgeon who practiced at several hospitals in Brooklyn and surrounding 
areas was sentenced to 13 years in prison and ordered to pay restitution and to forfeit over $7 
million following a jury trial for health care fraud, falsification of medical records, and money 
laundering.  Medicare was fraudulent billed more than $85 million for incision-and-drainage and 
wound debridement procedures that the surgeon did not perform.  The surgeon also wired more 
than a million dollars of fraud proceeds overseas.   
(SF) In February 2018, a physician was sentenced to 72 months in prison and ordered to forfeit 
$1.7 million after a jury convicted him for his role in a $10.4 million conspiracy to defraud the 
Medicare program.  The office manager pleaded guilty and was sentenced to 18 months in 
prison.  The physician accepted kickbacks from his co-conspirators in exchange for referring 
Medicare patients for electromyogram tests (EMGs), some of which were unnecessary, and 
physical therapy performed by unlicensed individuals.  The physician then disguised the 
payments as rent and set up a shell company to hide this illegal scheme. 
30  In June 2018, Health Quest Systems, Inc., Health Quest Medical Practice, P.C. ("HQMP''), 
Health Quest Urgent Medical Care Practice, P.C., ("HQUC") (collectively "Health Quest''); and 
Putnam Health Center ("PHC") entered into a settlement agreement to resolve their FCA 
liability.  From April 1, 2009 through June 23, 2015, Health Quest submitted claims for 
evaluation and management services but did not sufficiently document the services to support the 
level of service billed. As a result, the services were billed two levels higher than supported by 
the medical record.  From April 1, 2011 through August 2014, Health Quest submitted claims for 
home health services that lacked sufficient medical records to support the claim, including 
documentation of a face-to-face encounter with a physician. From March 1, 2014 through 
December 31, 2014, Health Quest subsidiary hospital, PHC, submitted allegedly false claims for 
inpatient and outpatient services referred to PHC by two orthopedic physicians, in alleged 
violation of the Physician Self-Referral Law. The two physicians had a direct financial 
relationship with PHC for providing administrative services and received compensation from 
PHC. The United States alleged their compensation exceeded the fair market value for the 
services, and thereby violated the Physician Self-Referral Law, which prohibits a hospital from 
billing Medicare for certain services referred by physicians with whom the hospital has an 
improper compensation arrangement. The United States further alleged that one purpose of the 
excessive compensation was to induce the above referrals to PHC, in violation of the Anti-
Kickback Statute.  Health Quest and PHC agreed to pay $15.6 million and enter into a 5-year 
CIA. 
In September 2018, the District Court for the Eastern District of Missouri entered a civil 
judgment in the amount of $5.5 million against a neurosurgeon, his fiancee, and their 
professional corporations DS Medical and Midwest Neurosurgeons.  Previously, in November 
2017, a federal jury sitting in St. Louis, Missouri found that the couple conspired to violate the 
civil FCA and also violated the FCA and the Anti-Kickback Statute.  The governments 
complaint and evidence at trial established that the neurosurgeon, who practiced through his 
professional corporation Midwest Neurosurgeons, used spinal implants when performing spinal 
fusion surgeries.  His fiancee started a spinal implant distributorship business called DS Medical 
in November 2008, after which he began using DS Medical as his spinal implant distributor for 
most of his spinal implant surgeries from 2009 through 2012.  His fiancee then received 
commissions on the expensive implants that he purchased from her company. 
(SF) In September 2018, a physician was convicted by a jury of one count of conspiracy to 
commit health care fraud and three counts of false statements relating to health care matters.  A 
clinic operator was convicted of one count of conspiracy to commit health care fraud and six 
counts of health care fraud.  Another clinic operator was convicted of was convicted of one count 
of conspiracy to commit health care fraud and three counts of health care fraud.  The defendants 
conspired to sell false medical orders signed by the physician and other documents certifying 
patients for home health services to home health agencies.  Co-conspirators at the home-health 
agencies then used the false and fraudulent paperwork to bill Medicare.  The defendants also 
billed Medicare for purported physician services that were actually provided by an unlicensed 
practitioner, if at all.  In total, Medicare paid approximately $17 million on the claims.   
Sentencing is scheduled for December 2018. 
(SF) In September and November 2018, a physician and owner of a medical billing company 
31  were sentenced following a jury trial of one count of conspiracy to commit health care fraud and 
wire fraud and three counts of health care fraud.  The physician was sentenced to 180 months in 
prison followed by 3 years of supervised release.  The owner was sentenced to 120 months in 
prison followed by 3 years of supervised release. The pair were ordered to pay approximately 
$9.1 million in restitution, and the court issued a preliminary order of forfeiture for the same 
amount.  The charges stemmed from the defendants involvement in a $26 million fraud scheme 
in which they billed for services, including nerve block injections that were not provided and 
conspired to evade Medicares prepayment review. 
Prescription Drugs / Medicare Part D 
Between October 2017 and February 2018, three Doctors were convicted of multiple counts 
regarding controlled substances and health care fraud for their participation in a scheme to 
illegally sell prescriptions for controlled substances.  The investigation disclosed that from about 
February 2012 through August 2016, two of the Doctors owned substance-abuse clinics in 
Philadelphia, while the third Doctor worked at a nearby substance-abuse clinic.  The three and 
other doctors sold prescriptions for Suboxone and Klonopin to drug dealers and drug addicts in 
exchange for cash payments.  Drug dealers openly sold controlled substances inside the clinics 
and on the street immediately outside.  The physicians did not perform medical or mental health 
examinations of their patients as required by law to legally prescribe these controlled substances.  
Virtually every customer who visited the clinics received the maximum daily doses of Suboxone 
and Klonopin regardless of the customers medical or mental health history.  The three Doctors 
were sentenced to a combined 4 years and 1 day in prison; ordered to pay $39,199 in restitution; 
joint and several; and ordered to forfeit $153,193.  
In December 2017 and February 2018, two co-conspirators connected with the health clinic 
Advance Care Services (ACS), were convicted of charges resulting from their involvement in an 
unlawful prescription drug operation.  In all, they were sentenced to a combined 10 years in 
prison and ordered to pay $2.5 million in restitution, joint and several.  The co-conspiratorsan 
ACS physician and a patient recruiterconspired to operate a fraudulent medical practice. ACS 
purported to be a pain management and HIV infusion clinic; however, the actual scheme 
involved patient recruiters bringing patients to the clinic to obtain medically unnecessary 
prescriptions for controlled substances.  Medicare was billed for medical examinations and tests 
that were not conducted properly or at all. According to statements made at the plea hearing and 
evidence submitted at sentencing, the ASC physician often took advantage of the female 
patients who received controlled-substance prescriptions by sexually molesting or harassing 
them.  The ASC physician was responsible for illegally distributing more than 700,000 dosage 
units of Hydrocodone, more than 240,000 dosage units of Alprazolam, and more than 2 million 
milliliters of promethazine with codeine cough syrup, worth more than $15 million on the street 
market.  Three other defendants involved in the scheme were previously sentenced to a 
combined 6 years and 5 months in prison and ordered to pay $2.5 million in restitution (joint and 
several).  
Superseding indictments returned in January and May 2018 charged seven individuals, including 
two leaders in Italy, for their roles in a Racketeering Influenced Corrupt Organization (RICO) 
which illegally operated pain clinics in Tennessee and Florida.  Defendants were charged with 
32  RICO conspiracy and drug trafficking conspiracy to distribute and dispense oxycodone, 
oxymorphone and morphine outside the scope of professional practice and not for a legitimate 
medical purpose and resulting in deaths.  Additional charges included maintenance of drug-
involved premises, distribution of oxycodone resulting in death, conspiracy to defraud the United 
States through the solicitations and receipt of illegal health care kickbacks and money 
laundering. The criminal enterprise is alleged to have operated clinics in Tennessee and Florida 
which generated revenues of over $21 million and prescribed in excess of 880 billion milligrams 
of oxycodone. Trial is scheduled in FY 2019.   
(SF) In March 2018, a New Orleans-area woman pleaded guilty to one count of conspiracy to 
unlawfully distribute and dispense oxycodone and to obtain oxycodone by fraud.  The defendant 
admitted to using a physicians stolen prescription template to create hundreds of fraudulent 
prescriptions for oxycodone in her name and in the names of others.  She further admitted that 
she was responsible for approximately 25,620 tablets of oxycodone distributed on the black 
market.  The defendant is scheduled to be sentenced in November 2018.  
(SF) In September 2018, the physician and the owner of a pain management clinic each were 
sentenced to 35 years in prison after a jury found them guilty of one count of conspiracy to 
unlawfully distribute controlled substances and three counts of unlawfully distributing and 
dispensing controlled substances.  From March 2015 through July 2017, the physician and the 
owner ran a clinic that operated as an illegal pill mill and produced daily profits often in excess 
of $30,000 that they divided between themselves.  The physician wrote prescriptions for 
hydrocodone, a Schedule II controlled substance, and carisporodal, a Schedule IV controlled 
substancea dangerous drug cocktail with no known medical benefit.  Altogether, the physician 
wrote approximately 18,252 prescriptions for over 2.1 million dosage units of hydrocodone and 
approximately 15,649 prescriptions for over 1.3 million dosage units of carisporodal.  Crew 
leaders ferried patients to the clinic, sometimes as many as 60 per day, so that the physician 
could write prescriptions for controlled substances in exchange for cash.   
(SF) In September 2018, a physician was sentenced to 78 months in prison to be followed by 
three years of supervised release, ordered to forfeit $4,800, and ordered to pay a $250,000 fine 
after a jury convicted him of participating in a conspiracy to distribute a controlled 
substance.  From January 2014 through October 2017, the physician and his co-conspirators 
performed sham consultations with cash-paying patients and improperly prescribed opioids and 
narcotics, including Oxycodone, Oxycontin, and Percocet, in exchange for cash payments.  The 
physician provided his co-conspirators with pre-signed prescriptions to use in his absence.  An 
employee at the physicians office was sentencing to serve 24 months in prison to be followed by 
three years of supervised release and ordered to pay $396,428 in restitution, jointly and 
severally.  A second employee was sentenced to serve 18 months in prison to be followed by 
three years of supervised release and ordered to pay $396,428 in restitution.  A third employee 
was sentenced to time-served, three years of supervised release, and ordered to pay $132,142 in 
restitution. 
Psychiatric and Psychological Testing and Services 
In November 2017, Region 8 Mental Health Services (Region 8) agreed to pay a lump sum of 
33  $6.9 million, plus approximately $1.7 million based on the anticipated value of six properties, to 
resolve allegations that it violated the civil FCA by submitting false claims to Medicaid.  Region 
8 provides a variety of mental health services to children and adults located in five counties in 
Mississippi.  The settlement resolves allegations that, from October 2004 through December 
2010, Region 8 submitted false claims for services to Medicaid beneficiaries enrolled in its 
preschool Day Treatment program that it did not provide or that were not provided by qualified 
individuals.  Medicaid defines Day Treatment as a behavioral intervention program, provided in 
the context of a therapeutic milieu, which provides children/adolescents with serious emotional 
disturbances the intensity of treatment necessary to enable them to live in the community. 
(SF) In September 2018, a Houston psychiatrist was sentenced to over 12 years in prison and 
ordered to pay $22 million in restitution after a jury convicted him for his involvement in a 
$155 million Medicare fraud scheme involving false claims for psychiatric services.  From 2006 
to February 2012, the psychiatrist indiscriminately admitted and readmitted patients into a partial 
hospitalization program causing false and fraudulent claims for intensive outpatient psychiatric 
treatment to be submitted to Medicare.  The psychiatrist falsified medical records and signed 
false documents to make it appear as if patients qualified for, required, and actually received the 
intensive psychiatric services.  The psychiatrist also personally billed Medicare for psychiatric 
services he did not provide.  The psychiatrist was personally responsible for over $55 million of 
the $155 million billed to Medicare.  Fifteen other defendants, including administrators, patient 
recruiters, and group home owners, have been sentenced from 5 to 45 years for their roles in this 
case. 
In July 2018, Early Autism Project, Inc. (EAP), South Carolinas largest provider of behavioral 
therapy for children with autism, entered into an FCA settlement agreement resolving allegations 
that:  (1) between January 1, 2009 and December 31, 2016, EAP submitted claims payable by the 
South Carolina Medicaid Waiver program for Early Intensive Behavioral Intervention therapy 
services by Consultants and Lead Therapists that either misrepresented the services provided or 
where services were not provided at all; and (2) between April 1, 2012, and July 9, 2016, EAP 
submitted claims to the Defense Health Agency for one-on-one Applied Behavioral Analysis 
therapy services that either misrepresented the services provided or where services were not 
provided at all.  EAP agreed to pay $8.8 million, and ChanceLight, Inc., for itself and on behalf 
of EAP, its wholly-owned subsidiary, entered into a 5-year CIA. 
Other Medicare and Medicaid Matters 
In November 2017, an individual was convicted of making false statements to Federal agents and 
was sentenced to 6 months in prison.  The individual owned and operated group homes in the 
Houston, Texas area. The individual engaged in a scheme to defraud Medicare by receiving 
kickbacks in exchange for referring her group home residents for home health services.  
(SF) In September 2018, a prominent Kentucky attorney was sentenced to 180 months in prison 
consecutive to a 144-month sentence previously imposed in a companion case, and ordered to 
pay more than $70 million in restitution.  He pleaded guilty to conspiracy to defraud the United 
States, conspiracy to retaliate against an informant, and conspiracy to escape from custody.  The 
attorney and his co-conspirators defrauded the Social Security Administration of more than 
34  $600 million by creating and submitting falsified medical evidence to support favorable 
disability determinations by the Social Security Administration.  As a result of the scheme, the 
Social Security Administration paid more than $70 million on fraudulent disability claims, and 
Medicare paid more than $50 million in health care benefits to individuals the Social Security 
Administration subsequently determined were not entitled to receive benefits.  
35  DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Office of Inspector General 
A certain portion of the funds appropriated under HIPAA are, by law, set aside for Medicare and 
Medicaid activities of HHS-OIG.  In FY 2018, the Secretary and the Attorney General jointly 
allotted $190.4 million to HHS-OIG after accounting for a sequester reduction of $13.6 
million.  OIG was allocated an additional $10.1 million in HCFAC mandatory funds from the 
Secretary.  Additionally, Congress appropriated $84.4 million in discretionary funding for HHS-
OIG HCFAC activities.   
The HHS-OIG mission is to protect the integrity of HHS programs and the health and welfare of 
the people they serve.  As established by the Inspector General Act of 1978, HHS-OIG is an 
independent and objective organization that fights fraud, waste, and abuse and promotes 
efficiency, economy, and effectiveness in HHS programs and operations.  HHS-OIGs vision is 
to drive positive change in HHS programs and in the lives of the people they served.  HHS-OIG 
pursues this vision through independent oversight of HHS programs and operations and by 
providing HHS and Congress with objective, reliable information for use in policymaking.  
HHS-OIG assesses the Departments performance, administrative operations, and financial 
stewardship.  HHS-OIG also evaluates risks to HHS programs and recommends recovery of 
misspent funds and program improvements.  The law enforcement component of HHS-OIG 
investigates fraud and abuse against HHS programs and holds wrongdoers accountable for their 
actions.  
With respect to HCFAC funds, HHS-OIG focuses on combating Medicare and Medicaid fraud, 
waste, and abuse, including in priority areas, such as protecting beneficiaries from prescription 
drug abuse, including opioid abuse; enhancing program integrity in non-institutional care 
settings, such as home health and hospice; and strengthening Medicaid program integrity, 
including working with State partners to enhance the effectiveness of the Medicaid Fraud 
Control Units (MFCUs).  HHS-OIG is working to strengthen oversight of the Medicare 
Advantage program.   
As the leading oversight agency specializing in health care fraud, HHS-OIG employs a multi-
disciplinary approach and uses data-driven decision-making to produce outcome-focused results.  
HHS-OIG leverages sophisticated data analysis to identify and target potential fraud schemes 
and areas of program waste and abuse and to provide quality, timely, and actionable data to 
frontline staff, as well as to its government and, as appropriate, private sector partners.  HHS-
OIG combines data analysis, field intelligence, and state-of-the-art investigative techniques to 
combat fraud and abuse.  
Results 
In FY 2018, HHS-OIG investigations resulted in 679 criminal actions against individuals or 
entities that engaged in crimes related to Medicare and Medicaid; and 795 civil actions, which 
include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary 
penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure 
36  matters.  In addition, during FY 2018, HHS-OIG excluded a total of 2,712 individuals and 
entities, the details of which are below. 
In FY 2018, HHS-OIG continued to staff and support Medicare Strike Force operations working 
in conjunction with DOJ Criminal Divisions Fraud Section, local USAOs, the FBI, and state and 
local law enforcement agencies.  HHS-OIG has assigned agents to Strike Forces in Miami and 
Tampa, Florida; Dallas and Houston, Texas; Los Angeles, California; Detroit, Michigan; 
Brooklyn, New York; Baton Rouge and New Orleans, Louisiana; Chicago, Illinois; and Newark, 
New Jersey/Philadelphia, Pennsylvania; along with a Corporate Strike Force in Washington, 
D.C.  HHS-OIG supports Strike Force operations by providing investigative, analytic, and 
forensic resources.  Among other fraudulent conduct, the Strike Forces have effectively 
investigated and prosecuted individuals and entities that do not provide legitimate health care 
services but exist solely for the purpose of defrauding Medicare and other government health 
care programs.  The continued support of Medicare Strike Force operations is a top priority for 
HHS-OIG.  
HHS-OIG also provides critical support in the establishment and ongoing work of the new 
Opioid Fraud and Abuse Detection Units established by the Attorney General in collaboration 
with HHS-OIG, FBI, and DEA.  These units focus specifically on opioid-related health care 
fraud using data to identify and prosecute individuals, such as prescribers of opioids, and entities, 
such as clinics, pill mills, and pharmacies, which are contributing to the opioid epidemic.  HHS-
OIG has assigned Special Agents to support 12 prosecutors identified by DOJ to focus solely on 
investigating and prosecuting opioid-related health care fraud cases.13 
Investigations, audits, and evaluations frequently reveal vulnerabilities, misspent funds, or 
incentives for questionable or fraudulent practices in agency programs or administrative 
processes.  As required by the Inspector General Act, HHS-OIG makes recommendations to 
agency managers to address these vulnerabilities.  In turn, agency managers may recommend 
legislative proposals or other corrective actions that, when enacted or implemented, close 
loopholes and reduce improper payments or conduct.  The savings from these efforts can be 
substantial.  For FY 2018, potential savings from legislative and administrative actions that were 
supported by HHS-OIG recommendations were estimated by third parties, such as the 
Congressional Budget Office or actuaries within HHS, to be $25.6 billion$25.0 billion in 
Medicare savings and $675 million in savings to the federal share of Medicaid.  HHS-OIGs 
expected recoveries from its involvement in health care audits and investigations totaled $4.7 
billion, which resulted in a return on investment (ROI) of $13 to $1.14 
                                                 
13 As of October 2018, OIG has assigned Special Agents to support 13 prosecutors with the newest addition of the 
Appalachian Regional Prescription Opioid Strike Force 
14 This ROI uses a 3-year average of expected recoveries, fines, penalties, and stolen and misspent funds relating to 
HHS-OIGs health care oversight and is compared with HHS-OIGs annual obligations.  This ROI differs from the 
HCFAC ROI, which uses actual dollars returned to the government. 
37  Additional information about savings achieved through such policy and procedural changes may 
be found in the HHS-OIG fall Semiannual Report to Congress, online at http://oig.hhs.gov.    
OIG Priority Outcomes 
With a $1 trillion portfolio to oversee, HHS-OIG sets priority outcomes to achieve the greatest 
impact across HHSs diverse programs.  For each priority outcome area, HHS-OIG executives 
and senior-level staff develop strategies, drive action, unleash organizational creativity, and 
measure impact to provide solutions and improve outcomes for HHS programs and 
beneficiaries.  HHS-OIGs current priority outcome areas were selected on the basis of past and 
ongoing work, top challenges facing HHS as identified annually by HHS-OIG, ability to collect 
data, and ability to influence outcomes.  HHS-OIGs initial priority outcome areas fall into two 
broad categories:  
1.  Minimize risks to beneficiaries 
  Protect beneficiaries from prescription drug abuse, including opioids 
  Ensure health and safety of children served by HHS grants 
2.  Safeguard programs from improper payments and fraud 
  Promote patient safety and accuracy of payment in home and community settings 
  Strengthen Medicaid protections against fraud and abuse 
These priority outcome areas reflect only some of the important work HHS-OIG performs.  They 
address key vulnerabilities identified in the HHS publication, Top Management and Performance 
Challenges.    
For instance, OIG has long recognized the Medicare home health benefit as a program area 
vulnerable to fraud, waste, and abuse.  In the baseline year for this effort, Medicare reimbursed 
over 11,000 distinct home health agencies (HHAs) for almost 7 million episodes of home health 
care, totaling approximately $18.7 billion.  Using data analytics, OIG identified four geographic 
areasFlorida, Texas, and select areas in Southern California and the Midwestthat have large 
numbers of home health providers with characteristics that OIG determined, based on its 
previous data analysis, to be suspect.  OIG efforts contributed to a 9 percent decrease in home 
health payments in the four geographic hot spots from CY 2015 to CY 2017.  Nationally, the 
decrease in home health spending over this same time was 2 percent.  OIG continues to monitor 
the progress of HHA spending in these hot spots and has surpassed the HHA spending reduction 
goal each year to date. 
38   
Enforcement 
HHS-OIG works with its law enforcement partners to conduct criminal and civil investigations 
involving the Medicare and Medicaid programs and participates in the settlement of False 
Claims Act cases, including through the negotiation of Corporate Integrity Agreements (CIAs).  
HHS-OIG works with the MFCUs to address fraud and abuse in the Medicaid program.  
Examples of this enforcement work appears elsewhere in this report.  In addition to investigating 
criminal and civil matters, HHS-OIG administers the exclusion program and imposes civil 
monetary penalties for a variety of health care related offenses. 
Combatting the Opioid Epidemic 
Fighting the opioid crisis and protecting beneficiaries from prescription drug abuse is among 
HHS-OIGs top priorities.  Opioids related matters are a substantial portion of HHS-OIGs 
investigations.  In June 2018, HHS-OIG participated with Federal, State, and local partners 
(including 30 MFCUs) in the National Health Care Fraud Takedown, described in more detail 
elsewhere in this report.  More than 600 defendants in 58 Federal districts were charged with 
participating in fraud schemes involving about $2 billion in false billings to Medicare and 
Medicaid.  Among those charged, 165 defendants (including 32 doctors) were charged in cases 
involving the illegal distribution of opioids.  HHS-OIG also issued exclusion notices to 587 
doctors, nurses, and other providers on the basis of conduct related to opioid diversion and abuse.  
Further, HHS-OIG developed and released a data brief providing data on the extent to which 
Medicare Part D beneficiaries receive extreme amounts of opioids or appear to be doctor 
shopping.  In collaboration with DOJ, FBI, and DEA, HHS-OIG has assigned agents and 
contributed data analysis to support the Opioid Fraud and Abuse Detection Units. 
Program Exclusions 
One important mechanism for safeguarding the care provided to program beneficiaries is through 
39  exclusion of providers and suppliers who have engaged in crimes related to Medicare or 
Medicaid, patient abuse or neglect, financial misconduct, or controlled substances, or as a result 
of license revocation.  This list of conduct is not exhaustive but identifies the most prevalent 
causes underlying HHS-OIGs exclusions of individuals or entities.  The effect of an HHS-OIG 
exclusion is that no Federal health care program payment may be made for any items or services 
furnished (1) by an excluded person or (2) at the medical direction or on the prescription of an 
excluded person.  HHS-OIG completed the deployment of a new service for Medicaid Fraud 
Control Units to report convictions through a central web based portal for exclusion.  HHS-OIG 
is also responsible for reinstating providers who apply and have met the requirements of their 
exclusions. 
In FY 2018, HHS-OIG excluded a total of 2,712 individuals and entities.  In addition to those 
mentioned in the Program Accomplishments section above, exclusion actions by HHS-OIG 
included: 
  In November 2017, HHS-OIG excluded an individual for a minimum period of 30 years.  
The individual was an administrator at Passages Hospice, LLC.  According to court 
documents, from August 2009 to September 2009, the administrator altered patient files 
to make visits that were at the routine level appear to have been general inpatient services 
for purposes of Medicare payment. General inpatient services, which are paid at a higher 
rate than routine care services, were not medically necessary and were not provided.  The 
administrator pleaded guilty to conspiracy to commit an offense against the United States 
and was sentenced to 2 years and 4 months in prison and ordered to pay $9 million in 
restitution, joint and several among other defendants. 
  In November 2017, HHS-OIG excluded an individual for a minimum period of 50 years.  
The individual was a pharmacist who owned RX Discount Pharmacy.  According to 
evidence presented at trial, from January 2010 through December 2015, the pharmacist 
sold prescription pain pills without a legitimate medical purpose and sold 
pseudoephedrine, knowing or having reason to believe that it was being used to 
manufacture methamphetamine.  Many of the pharmacists customers visited pain clinics 
in other states to obtain illegitimate prescriptions from irreputable clinics.  The 
pharmacist would charge $600 to $1,000 to fill the prescriptions, which included 
excessive amounts of oxycodone.  According to trial testimony, the pharmacist also sold 
multiple boxes of pseudoephedrine at a time, for excessively high prices, to drug addicts 
and traffickers.  A jury convicted the individual on 71 counts involving the illegal 
dispensing of oxycodone, hydrocodone, and pseudoephedrine, and sentenced him to 30 
years in prison.  
  In May 2018, HHS-OIG excluded a doctor for a minimum period of 75 years.  The doctor 
was excluded based on his convictions on multiple counts of criminal sexual conduct.  
From about July 1998 to about May 2015, the doctor sexually abused patients in his 
position as the lead doctor for the USA Womens gymnastics team.  It was his job to 
medically treat the gymnasts on the team, and during those treatment sessions, the doctor 
would sexually touch the victims.  The doctor was sentenced to 40 to 175 years in prison 
on the basis of his conviction in the 30th Judicial Circuit Court of Ingham County, 
40  Michigan, and 40 to 125 years in prison for his conviction in the 56th Judicial Circuit 
Court of Eaton County, Michigan.  The doctor was also convicted in the United States 
District Court of Western Michigan of receipt and attempted receipt of child 
pornography, possession of child pornography and destruction and concealment of 
records and tangible objects.  In addition, the doctors license to practice as an osteopath 
was revoked by the Michigan Department of Licensing and Regulatory Affairs.  HHS-
OIG had previously excluded the doctor in 2017 based on his suspension from the 
Michigan Department of Health and Human Services.   
  In June 2018, HHS-OIG excluded a psychiatrist for a minimum period of 15 years.  
According to court documents, from about January 2008 to about March 2014, the 
psychiatrist engaged in a conspiracy to defraud the Office of Workers Compensation 
Program (OWCP), which is a component of the Department of Labor, through the 
submission of millions of false claims.  The psychiatrist and his co-conspirators would 
create templates and patient reports purportedly reflecting patients status, history, 
treatment, or progress that would be submitted to OWCP randomly.  These created 
records would then be used to bill OWCP for false claims for services that were never 
provided.  The psychiatrist pleaded guilty to conspiracy to commit health care fraud and 
was sentenced to 10 months in prison and ordered to pay approximately $2.3 million in 
restitution. 
Civil Monetary Penalties 
HHS-OIG has the authority to seek civil monetary penalties (CMPs), assessments, and exclusion 
against an individual or entity based on a wide variety of prohibited conduct.  Three common 
ways that HHS-OIG seeks CMPs, assessments, and exclusion are described below.  In the first 
half of FY 2018 (October 1, 2017 to March 31, 2018), HHS-OIG concluded cases involving 
more than $35.5 million in CMPs and assessments. 
Affirmative Litigation and Exclusion 
HHS-OIG may seek a CMP or exclusion against individuals or entities that present claims to 
Federal health care programs that the individual or entity knows or should know are for items or 
services that were not provided as claimed or were false or fraudulent.  HHS-OIG may also seek 
a CMP or exclusion against individuals or entities who knowingly and willfully violate the Anti-
Kickback Statute by: (1) offering or paying remuneration, directly or indirectly, to induce 
referrals of Federal health care program business; or (2) soliciting and receiving remuneration, 
directly or indirectly, in return for referrals of Federal health care program business.  
Affirmative litigation examples include: 
  In December 2017, a doctor and his medical practice, The Female Pelvic Medicine 
Institute of Virginia, P.C. (FPMI), agreed to pay more than $1.4 million and enter into a 
3-year IA to resolve their potential liability under the Civil Monetary Penalty Law 
(CMPL) for submitting claims to Federal health care programs for items or services that 
FPMI knew or should have known were not provided as claimed or were false or 
fraudulent.  Specifically, HHS-OIG alleged that the M.D. and FPMI submitted claims for 
41  pelvic floor therapy services that were provided by unqualified individuals; diagnostic 
electromyography services under CPT Code 51784 that had not been performed pursuant 
to the indicated codes requirements; unbundled biofeedback procedures; and incident 
to services that lacked the required physician supervision level.  OIG also alleged that 
the M.D. and FPMI submitted claims for electromyography services under CPT Code 
51784 and anorectal manometry services under CPT Codes 91120 and 91122 that were 
not supported by the medical record.  This resolution resulted from HHS-OIGs 
collaboration with the Consolidated Data Analytics Center.  
  In June 2018, Comanche County Hospital Authority d/b/a Comanche County Memorial 
Hospital (CCHA), agreed to pay $566,806 to resolve its potential liability under the 
CMPL related to allegations that CCHA submitted claims to Medicare for emergency 
ambulance transportation to destinations such as skilled nursing facilities and patient 
residences that should have been billed at the lower non-emergency rate.  Additionally, 
during HHS-OIGs investigation, CCHA discovered and disclosed that it submitted 
claims to Medicare for emergency ambulance transportation that were not medically 
reasonable or necessary.  CCHA also disclosed that it submitted claims to Medicare for 
transports where the documentation for the transport was not consistent with the patients 
condition, and therefore did not support the documented medical necessity for the 
transport.  This settlement resulted from collaboration between the Office of Counsel to 
the Inspector General (OCIG) and HHS-OIGs Consolidated Data Analysis Center.  
OCIG has settled eight affirmative CMPL cases based on this type of conduct since 
September 2016. 
Patient Dumping 
HHS-OIG may also seek a CMP against any hospital that negligently violates its obligations 
under the Emergency Medical Treatment and Labor Act (EMTALA), known as the patient 
dumping statute, which requires a hospital to stabilize and treat, or appropriately transfer if the 
hospital lacks the specialized capabilities necessary to stabilize the person, anyone who presents 
to the emergency department with an emergency medical condition.  
Patient dumping examples include: 
  In December 2017, Cambridge Health Alliance (CHA) agreed to pay $90,000 to resolve 
its potential liability under EMTALA.  OIG alleged that CHA violated EMTALA when it 
failed to screen a patient after she presented on hospital property in medical distress.  
Specifically, HHS-OIG alleged that a patient who was experiencing a severe asthma 
attack presented to CHAs Somerville Hospital Campus, but was unable to gain entry to 
the ambulance bay doors.  The patient called 911, which notified the hospitals 
responding nurse.  HHS-OIG alleged that CHA was negligent in its search for the patient, 
looking only briefly outside without leaving the ambulance bay door or searching the 
sidewalk located just steps from the doors.  The patient had collapsed on a bench adjacent 
to the ambulance doors.  Ultimately, the 911 dispatchers sent emergency responders to 
the hospital who found the patient in full cardiac arrest and no longer breathing.  The 
42  patient was brought inside the hospital in grave condition, and 6 days later died of 
hypoxic brain injury.  
  In January 2018, Piedmont Newton Hospital (PNH) agreed to pay $52,414 to resolve its 
potential liability under EMTALA.  HHS-OIG alleged that PNH violated EMTALA 
when it failed to provide an appropriate medical screening exam and stabilizing treatment 
to a patient (TMK) and inappropriately transferred TMK to another hospital.  
Specifically, HHS-OIG alleged that TMK arrived at PNH complaining of left-sided 
pleuritic chest pain and abdominal pain.  PNHs emergency department (ED) physician 
observed that her abdomen was diffusely firm with hypoactive bowel sounds, and 
ordered blood tests, which revealed that TMKs lactic acid and bleeding and clotting time 
were elevated beyond normal limits.  The ED physician learned that TMK had undergone 
dilation and curettage two days earlier.  The ED physician ordered an acute abdominal 
series with chest x-ray for TMK, which showed a large amount of intraperitoneal air 
under her right diaphragm, suggesting bowel perforation.  The ED physician consulted 
with the on-call surgeon, who recommended transferring TMK to the other hospital 
where she previously underwent the dilation and curettage procedure.  The other hospital 
agreed to accept the transfer and asked that TMK be airlifted to their facility.  The ED 
physicians notes revealed that TMK had a perforated bowel and her condition was 
critical at the time of transfer.  Upon her arrival at the other hospital, TMK was in septic 
shock and appeared on the verge of a respiratory collapse.  She was immediately 
intubated and taken to the operating room for a resection and colostomy.  TMKs 
condition worsened and she died later that day due to septic shock with multi-organ 
failure. 
  In April 2018, Covenant Medical Center (Covenant) entered into a $90,000 settlement 
agreement with HHS-OIG to resolve allegations that it violated EMTALA when it failed 
to provide an adequate medical screening examination and stabilizing treatment for a 
patient and then inappropriately transferred him to another hospital.  The patient, a 54-
year-old man, arrived by ambulance to Covenants Emergency Department (ED) 
complaining of shortness of breath, chest pain, and diaphoresis.  The ED physician 
screened the patient and consulted the on-call cardiologist.  The patients condition 
worsened, and he was intubated.  On advice of the on-call cardiologist, the ED physician 
began transcutaneous pacing.  The ED physician did not request the on-call cardiologist 
present to the ED nor did the on-call cardiologist present to the ED to examine and treat 
the patient.  The ED physician requested transfer to a nearby hospital for placement of a 
transvenous pacemaker.  The patient was transferred to the receiving hospital nearly three 
hours after he presented to Covenants ED.  The receiving hospital placed a transvenous 
pacemaker on the patient, but he expired shortly after.  OIG alleged that Covenants on-
call cardiologist was capable of providing a transvenous pacemaker. 
Self-Disclosure  
HHS-OIG maintains the Self-Disclosure Protocol whereby providers may voluntarily identify, 
disclose, and resolve instances of potential fraud involving Federal health care programs for 
resolution under the Civil Monetary Penalties Law (CMPL).  
43  Self-disclosure examples include: 
  In January 2018, after self-disclosing conduct to HHS-OIG, Shands Jacksonville Medical 
Center, Inc. d/b/a UFHealth Jacksonville and University of Florida Jacksonville 
Physicians, Inc. (collectively, UFHealth), agreed to pay more than $4.4 million to 
resolve its liability under the CMPL.  Specifically, HHS-OIG alleged that UFHealth 
presented false claims to Medicare and Medicaid for hospital and professional services 
associated with surgical procedures performed by an ophthalmologist at UF Health 
Jacksonville, from April 8, 2010, through April 7, 2016, when the records did not support 
medical necessity for the procedures performed.  
  In July 2018, after self-disclosing conduct to HHS-OIG, St. Agnes Healthcare, Inc. (St. 
Agnes), agreed to pay more than $2.2 million to resolve its liability under the CMPL.  
Specifically, HHS-OIG alleged that, from February 1, 2011, through July 1, 2017, St. 
Agnes paid a physician excessive compensation in the forms of an inflated salary and 
improper incentive and administrative payments to induce his referrals of Federal health 
care program patients.   
  In April 2018, after self-disclosing conduct to HHS-OIG, BenchMark Rehabilitation 
Partners, LLC, BenchMark Growth Partners, LLC, BenchMark Premier Partners, LLC, 
BenchMark East Partners, LLC, BenchMark Development Partners, LLC, and 
BenchMark West Partners, LLC (collectively, BenchMark), agreed to pay more than 
$3.1 million to resolve its alleged liability under the CMPL.  Specifically, HHS-OIG 
alleged that BenchMark submitted claims to Medicare and TRICARE for time-based 
outpatient rehabilitation therapy services provided to Medicare and TRICARE 
beneficiaries when BenchMarks therapists did not provide constant attendance or direct 
one-on-one contact because the therapy services were provided concurrently with another 
Medicare or TRICARE beneficiary. 
  In May 2018, after self-disclosing conduct to HHS-OIG, HVHC LLC, Visionworks of 
America, Inc., Visionary Properties, Inc., Visionworks, Inc., Empire Vision Center, Inc. 
(collectively, Visionworks), agreed to pay more than $3.6 million to resolve its alleged 
liability under the CMPL.  Specifically, HHS-OIG alleged that Visionworks paid excess 
remuneration to certain optometrists in the form of space and equipment leases that were 
below fair market value and/or by failing to collect one or more rental amounts under 
space and equipment leases, in violation of the Anti-Kickback Statute.  
Corporate Integrity Agreements (CIA) and Enforcement 
Many health care providers elect to settle their cases before litigation.  HHS-OIG provides 
information on its website that identifies how it evaluates future risk to Federal health care 
programs from providers who settle health care fraud cases (called the Fraud Risk Indicator).  
As part of the settlements, providers often agree to enter into CIAs with HHS-OIG to avoid 
exclusions from Medicare, Medicaid, and other federal health care programs.   
44  Under a CIA, a provider commits to establishing a program and taking other specified steps to 
ensure future compliance with Medicare and Medicaid rules.  The compliance programs are 
designed, in part, to prevent future fraud.  HHS-OIG monitors providers compliance with these 
agreements.  HHS-OIG may impose penalties on entities that fail to comply with the 
requirements of their CIAs, as shown in the examples below:  
  In July 2018, pursuant to HHS-OIGs authority under the CIA between HHS-OIG and 
eClinicalWorks, LLC (ECW), HHS-OIG issued a $132,500 stipulated penalty for ECWs 
failure to timely report patient safety issues to HHS-OIG as reportable events.  In May 
2017, ECW, one of the nations largest vendors of electronic health records (EHR) 
software, agreed to pay $155 million and entered into a CIA to resolve ECWs alleged 
FCA liability when ECW concealed from its customers that its software did not comply 
with the requirements for meaningful use certification.  The CIA requires ECW to 
retain an Independent Software Quality Oversight Organization, which evaluates ECWs 
software quality control systems, to provide notice to its customers of any safety related 
issues, and to maintain on its customer portal a comprehensive list of such issues and any 
steps users should take to mitigate potential patient safety risks.  The CIA requires ECW 
to notify OIG of certain reportable events, including patient safety issues. The CIA 
stipulates that failure to timely report qualifying events may result in the assessment of 
penalties.  ECWs failure to comply with the reportable events provision of the CIA 
resulted in HHS-OIG imposing the $132,500 stipulated penalty. 
  Chatsworth Park Health Care Center (Chatsworth), Palm Terrace Care Center (Palm 
Terrace), and Park Ridge Care Center (Park Ridge)skilled nursing facilities (SNFs) 
affiliated with North American Health Care, Inc. (NAHC)paid a total of $843,106.04 
to resolve their CMPL liability for employing or contracting with individuals who were 
excluded from participation in Federal health care programs to provide items or services 
for which payment may be made under such programs.  Specifically, the settlement 
agreements resolve allegations that (1) Chatsworth employed an excluded individual 
from May 1, 2014, through December 19, 2016; (2) Palm Terrace employed an excluded 
individual from January 24, 2006, through January 31, 2017; and (3) Park Ridge 
contracted with an excluded individual from May 20, 2012, through November 20, 2016.  
NAHC disclosed this conduct to HHS-OIG pursuant to its obligations under its CIA with 
HHS-OIG.  NAHC entered into the CIA in 2016 in connection with its settlement of FCA 
liability based on the alleged provision of medically unnecessary rehabilitation therapy 
services provided to patients at SNFs that had service agreements with NAHC. 
Audits and Evaluations 
HHS-OIG promotes the economy, effectiveness, and efficiency of HHS programs through a 
program of audits and evaluations.  HHS-OIG uses a dynamic work planning process and makes 
adjustments throughout the year to meet evolving priorities and to anticipate and respond to 
emerging issues with the resources available.  HHS-OIG assesses relative risks in Medicare and 
Medicaid (as well as the many other programs for which HHS-OIG has oversight authority) to 
identify the areas most in need of attention and, accordingly, to set priorities for the sequence and 
45  proportion of resources to be allocated.  In addition, HHS-OIG considers a number of factors, 
including:  
  Mandatory requirements for HHS-OIG reviews, as set forth in laws, regulations, or other 
directives;  
  Requests made or concerns raised by Congress, HHS management, or the Office of 
Management and Budget (OMB);  
  Strategic goals; 
  Top management and performance challenges facing HHS;  
  Work to be performed in collaboration with partner organizations;  
  Managements actions to implement recommendations from previous reviews; and  
  Timeliness. 
HHS-OIGs audit and evaluation findings in FY 2018 are listed below and organized by the 
following targeted issue areas:  
  Preventing fraud; 
  Analyzing payment trends and detecting potential fraud; 
  Identifying misspent funds and addressing improper payments; and 
  Promoting quality and safety in health care. 
Program Integrity and Preventing Fraud 
Weaknesses Exist in Medicaid Managed Care Organizations Efforts to Identify and Address 
Fraud and Abuse.  OIG found that managed care organizations (MCO) play an increasingly 
important role in fighting fraud and abuse in Medicaid, yet weaknesses exist in their efforts to 
identify and address fraud and abuse.  Although the number of cases varied widely, some MCOs 
identified and referred few cases of suspected fraud or abuse to the State in 2015.  In addition, 
MCOs took actions against providers suspected of fraud or abuse but did not typically inform the 
State, including when MCOs terminated provider contracts for reasons associated with fraud or 
abuse.  Finally, MCOs did not always identify and recover overpayments, including those 
associated with fraud or abuse.  At the same time, selected States employ a number of strategies 
to address MCOs weaknesses and improve MCO efforts.  (OEI-02-15-00260) 
2017 Performance Data for the Senior Medicare Patrol Projects.  The Senior Medicare Patrol 
(SMP) projects receive grants from the Administration for Community Living to recruit and train 
retired professionals and other senior citizens to prevent, recognize, and report health care fraud, 
errors, and abuse.  In 2017, the 53 SMP projects had a total of 6,130 active team members who 
46  conducted a total of 26,429 group outreach and education events, reaching an estimated 1.9 
million people.  In addition, the projects had 226,261 individual interactions with, or on behalf 
of, a Medicare beneficiary.  The projects reported $2,010,475 in expected Medicare recoveries, 
which came primarily from one project that prompted law enforcement to open an investigation 
that resulted in a settlement with a hospice company.  The SMP projects also reported $211,749 
in cost avoidance and $44,468 in savings to beneficiaries and others.  (OEI-02-18-00130) 
MS Ensured That Medicare Shared Savings Program Beneficiaries Were Properly Assigned: 
Beneficiaries Were Assigned to Only One Accountable Care Organization and Were Not 
Assigned to Other Shared Savings Programs.  The ACA established the Medicare Shared 
Savings Program (MSSP) to facilitate coordination and cooperation among providers and 
suppliers to: (1) improve quality of care for Medicare fee-for-service beneficiaries; and (2) 
reduce health care costs.  Eligible providers and suppliers may voluntarily participate in the 
MSSP by creating or joining an accountable care organization (ACO).  Beneficiary assignment is 
the basis for many key MSSP operations, such as determining an ACOs financial performance 
and reporting quality measures after each performance year.  The designated ACO is responsible 
for the quality and cost of care of its assigned Medicare beneficiaries during a performance year.  
ACOs may be eligible to receive additional payments (i.e., shared savings payments) if they 
reduce health care costs and meet certain quality performance standards.  ACOs may also be 
responsible for a portion of any shared losses.  CMS complied with Federal requirements when 
assigning beneficiaries to ACOs in the MSSP during Performance Years 2013 through 2015 by 
ensuring that MSSP beneficiaries were assigned to only one ACO and were not assigned to other 
savings programs.  (A-09-17-03010)  
Medicare Needs Better Controls to Prevent Fraud, Waste, and Abuse Related to Chiropractic 
Services.  This portfolio presents an overview of program vulnerabilities identified in prior OIG 
audits, evaluations, investigations, and legal actions related to chiropractic services in the 
Medicare Program.  It consolidates the findings and issues identified in that work and discusses 
recommendations from prior reports that have not been implemented or have been implemented 
ineffectively.  In addition, this portfolio provides information to help CMS understand the need 
for effective controls over chiropractic services.  (A-09-16-02042)  
Medicare Advantage Encounter Data Show Promise for Program Oversight, but Improvements 
Are Needed.  CMS collects detailed information from MA organizations regarding each service 
provided to beneficiaries in the MA program.  This information is known as MA encounter data.  
Overall, 28 percent of MA encounter records that HHS-OIG reviewed from the first quarter of 
2014 had at least 1 potential error, but CMS reported correcting the majority of these records.  
With CMSs subsequent correction, only 5 percent of the records in HHS-OIGs review would 
contain a potential error.  Some of these errors may raise concerns about the legitimacy of 
services documented in the data, such as records that lacked a beneficiary last name or a valid 
identifier for the billing provider.  Only a few MA organizations submitted half of the encounter 
records that had a potential error.  CMS does not require MA organizations to submit certain 
provider identifiers used in program integrity reviews, and these were frequently absent from 
encounter data.  Furthermore, CMS has not tracked how MA organizations responded to edits 
that reject data, i.e., reject edits, nor has it established performance measures to monitor MA 
organizations submission of records with missing or invalid data.  (OEI-03-15-00060)  
47  Reliance on Unverified Patient Lists Creates a Vulnerability in Home Health Surveys.  HHS-
OIG found that some patient lists supplied by home health agencies (HHAs) were missing 
Medicare beneficiaries, allowing them to be excluded from surveyor inspections.  HHS-OIG also 
found that surveyors cannot comprehensively verify that HHA-supplied patient lists are complete 
at the time they conduct their surveys.  While HHS-OIGs analysis does not demonstrate that 
these providers were engaged in fraudulent activity, it does illustrate a vulnerability that HHAs 
could exploit to conceal fraudulent activity or health and safety violations.  However, existing 
data sources may be useful tools for both surveyors and CMS.  HHS-OIG encouraged CMS to 
explore actions to mitigate this vulnerability.  (OEI-05-16-00510)  
CMS Ensured Nearly All Part D Drug Records Contained Valid Prescriber Identifiers in 2016.  
Nearly all prescription drug event (PDE) records for Part D drug claims in 2016 contained valid 
prescriber National Provider Identifiers (NPIs).  Prescriber identifiers are a valuable program 
integrity safeguard as they enable CMS and Part D plan sponsors to determine if legitimate 
practitioners have prescribed drugs for enrollees.  The Medicare Access and the Childrens 
Health Insurance Program (CHIP) Reauthorization Act of 2015 requires that, beginning in 2016, 
pharmacy claims for covered Part D drugs must contain valid prescriber NPIs.  Additionally, the 
law requires the HHS Secretary to establish procedures for determining the validity of these 
prescriber NPIs and requires HHS-OIG to submit to Congress a report on the effectiveness of 
these procedures no later than January 1, 2018.  The evaluation report fulfills HHS-OIGs 
mandate under the CHIP Reauthorization Act.  The report concludes that the system edits that 
CMS currently has in place to check PDE records are effective in ensuring the validity of the 
vast majority of Part D prescriber NPIs.  (OEI-03-17-00040)  
Medicaid Fraud Control Units: Investigation and Prosecution of Fraud and Beneficiary Abuse 
in Medicaid Personal Care Services.  MFCUs investigate and prosecute Medicaid provider fraud 
and patient abuse or neglect under State law.  HHS-OIG conducted this study to provide data on 
MFCU investigations, indictments, and convictions involving fraud and patient abuse in 
Medicaid personal care services (PCS).  HHS-OIG found that during the review period, PCS 
fraud cases were a substantial and growing percentage of MFCU cases and outcomes.  In FY 
2015, fraud cases involving PCS providers or attendants constituted 12 percent of total 
investigations.  From FY 2012 through FY 2015, fraud cases involving PCS providers or 
attendants constituted 38 percent of indictments and 34 percent of convictions.  HHS-OIG also 
found that during this time, indictments increased 56 percent and convictions increased 33 
percent.  HHS-OIG found that MFCUs have made recommendations to States for strengthening 
PCS oversight.  Finally, HHS-OIG found that, in MFCUs efforts to protect beneficiaries 
receiving PCS services, they are constrained by their ineligibility to receive Federal funding to 
investigate and prosecute complaints of beneficiary abuse or neglect in non-facility settings (such 
as beneficiaries' homes).  The findings suggest that PCS remain vulnerable to fraud and support 
the need for greater oversight of Medicaid PCS.  (OEI-12-17-00500) 
Analyzing Payment Trends and Detecting Potential Fraud in Medicaid  
Ohio Received Millions in Unallowable Bonus Payments, Kansas Received Millions in 
Unallowable Bonus Payments.  Under the CHIP Reauthorization Act of 2009, States receive 
bonus payments to offset the costs of increased enrollment of children in Medicaid.  These two 
48  reports are part of a series of reviews that HHS-OIG conducted to determine whether these bonus 
payments were allowable.  Both Ohio and Kansas overstated their current enrollment in their 
bonus requests to CMS because they included individuals who did not qualify because of their 
basis-of-eligibility category.  As a result of the States overstated enrollment numbers, CMS 
overpaid Ohio $29.5 million and Kansas $17.8 million in bonus payments.  Ohio and Kansas did 
not concur with HHS-OIGs findings or recommendations to refund the excess payments.  (A-
04-16-08049, A-04-16-08050) 
North Carolina Did Not Comply with Federal and State Requirements When Making Medicaid 
Cost-Sharing Payments for Professional Medical Services.  States must make medical assistance 
available for Medicare deductibles, coinsurance, and copayments (cost-sharing) for certain 
individuals who are dually eligible to be enrolled in both Medicare and Medicaid.  In North 
Carolina, Medicaid is required to make cost-sharing payments at the lesser of the cost-sharing 
amount or the Medicaid allowable payment.  North Carolina did not comply with Federal and 
State requirements when making Medicaid cost-sharing payments for professional medical 
services.  On the basis of its sample results, HHS-OIG estimated that North Carolina made at 
least $63 million in improper Medicaid cost-sharing payments and claimed Federal 
reimbursement of at least $41.2 million for these payments.  These improper payments occurred 
because North Carolina did not program its Medicaid Management Information System (MMIS) 
to calculate Medicaid cost-sharing payments for professional medical services in accordance 
with the States required cost-sharing payment methodology.  (A-04-16-04054)  
New Jersey Claimed Hundreds of Millions in Unallowable or Unsupported Medicaid School-
Based Reimbursement.  New Jersey did not follow Federal regulations and CMS guidance when 
it developed its payment rates for Medicaid school-based services and, as a result, claimed 
$300.5 million in unallowable costs.  New Jersey claimed an additional $306.2 million in 
reimbursement using payment rates developed with unsupported costs.  Among its findings, 
HHS-OIG determined that: (1) New Jerseys contractor changed school employees responses to 
time studies to indicate that their activities were directly related to providing Medicaid services 
when the responses indicated the activities were unrelated; (2) New Jersey improperly 
incorporated into its payment rates more than $400 million owed to the school employees 
pension fund despite not having made scheduled payments to the fund in nearly 20 years; and (3) 
salaries of some employees who did not provide health-related services were incorporated into 
the payment rates.  In addition, New Jersey did not maintain documentation related to the time 
studies, which it used to identify the percentage of time personnel provided particular services.  
(A-02-15-01010) 
Texas Did Not Appropriately Spend Some State Balancing Incentive Payments Program Funds.  
Texas appropriately spent $272.4 million of the $284.4 million in Balancing Incentive 
Payments Program (BIPP) funds it received.  Of the remaining $12 million, Texas 
inappropriately spent $6.3 million for medical service rate increases that did not benefit 
Medicaid recipients and did not spend $5.7 million in BIPP funds before the end of the funding 
period.  Additionally, Texas did not separately track BIPP funds or follow CMS instructions for 
extending the funding period.  (A-06-15-00041)  
49  New York Did Not Correctly Determine Medicaid Eligibility for Some Newly Enrolled 
Beneficiaries.  New York did not always determine Medicaid eligibility for newly eligible 
beneficiaries in accordance with Federal and State requirements.  In HHS-OIGs sample of 130 
beneficiaries, New York correctly determined eligibility for 90 beneficiaries.  However, it did 
not determine eligibility for 37 beneficiaries in accordance with Federal and State requirements 
and did not provide supporting documentation to verify beneficiaries were newly eligible for 
the remaining 4 potentially ineligible beneficiaries.  The total exceeds 130 because 1 
beneficiary was found to be ineligible for one determination period and found to be potentially 
ineligible for another determination period.  On the basis of its sample results, HHS-OIG 
estimated that New York made Federal Medicaid payments of $26.2 million on behalf of 
47,271 ineligible beneficiaries.  (A-02-15-01015)  
California Made Medicaid Payments on Behalf of Newly Eligible Beneficiaries Who Did Not 
Meet Federal and State Requirements.  For HHS-OIGs sample of 150 beneficiaries who were 
newly eligible for Medicaid, California made Medicaid payments on behalf of 112.  However, 
for the remaining 38 beneficiaries, California made payments on behalf of ineligible 
beneficiaries (e.g., a woman who did not meet eligibility requirements for the newly eligible 
group because she was pregnant) and potentially ineligible beneficiaries (e.g., a beneficiary who 
may not have met the residency requirement).  On the basis of its sample results, HHS-OIG 
estimated that California made Medicaid payments of $738.2 million ($628.8 million Federal 
share) on behalf of 366,078 ineligible beneficiaries and $416.5 million ($402.4 million Federal 
share) on behalf of 79,055 potentially ineligible beneficiaries.  These deficiencies occurred 
because Californias eligibility determination systems lacked the necessary system functionality 
and eligibility caseworkers made errors.  HHS-OIG also identified a weakness in Californias 
procedures related to determining eligibility of individuals who may not have intended to apply 
for Medicaid.  (A-09-16-02023) 
New Jersey Claimed Federal Medicaid Reimbursement for Childrens Partial Hospitalization 
Services That Did Not Meet Federal and State Requirements.  HHS-OIG estimated that New 
Jersey improperly claimed at least $54.7 million in Federal Medicaid reimbursement for 
childrens partial hospitalization services that did not meet Federal and State requirements.  
New Jersey did not comply with Federal and State requirements for all 100 of the claims in 
HHS-OIGs sample, including 94 that contained more than one deficiency.  For all 100 claims, 
HHS-OIG found that services provided were not documented or adequately supported.  For 81 
claims, services were provided at a facility not licensed by New Jerseys hospital licensing 
agency to provide outpatient hospital services.  For 48 claims, providers did not meet the 
minimum staff-to-client ratio requirement for group therapy services.  For 16 claims, services 
were provided by staff members who did not meet qualification requirements.  Finally, for 10 
claims weekly progress notes were not maintained.  As a result, the quality of care provided to 
the children at these providers might have been inadequate.  The deficiencies occurred because 
New Jersey did not ensure that childrens partial hospitalization services were provided by 
appropriately licensed hospitals.  Also, New Jersey did not adequately monitor the childrens 
partial hospitalization program to ensure that providers complied with Federal and State 
requirements.  (A-02-16-01008) 
50  New York Did Not Comply With Federal Grant Requirements for Claiming Marketplace 
Contract Costs to Medicaid and the Childrens Health Insurance Program.  New York did not 
always follow Federal requirements for claiming Maximus contract costs to Medicaid and 
CHIP.  Specifically, New York claimed unallowable costs totaling as much as $954,521 (as 
much as $852,992 in unallowable profit fees and $101,529 in unallowable general and 
administrative costs and related profit fees).  This occurred because New York did not establish 
a basis for the profit fee rate with its contractor, Maximus, Inc., and did not require Maximus to 
retroactively adjust the calculation of its profit fee and general and administrative costs by 
removing project costs that should not have been subject to these charges.  (A-02-15-01014)  
Potential Misclassifications Reported by Drug Manufacturers May Have Led to $1 Billion in 
Lost Medicaid Rebates.  HHS-OIG found that drug manufacturers may have misclassified 3 
percent of drugs in the Medicaid Drug Rebate Program (rebate program).  These potential 
misclassifications may have led to $1.3 billion in lost Medicaid rebates and demonstrate the 
opportunity for CMS to improve its oversight of classification data in the rebate program.  (OEI-
03-17-00100) 
Arkansas Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-
Administered Drugs.  Arkansas did not invoice manufacturers for rebates associated with $9.9 
million (Federal share) in physician-administered drugs.  Arkansas improperly claimed Federal 
reimbursement for single-source drugs and top-20 multiple-source drugs.  Also, Arkansas did not 
submit the utilization data necessary to secure rebates for all other physician-administered drug 
claims totaling $1.4 million (Federal share).  (A-06-16-00018)  
Arizona Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to Enrollees of 
Medicaid Managed-Care Organizations.  Arizona did not bill for and collect from manufacturers 
estimated rebates of $36.7 million ($25.6 million Federal share) for physician-administered 
drugs.  Arizona did not always bill for and collect rebates from manufacturers because it did not 
have a system edit to ensure that National Drug Codes (NDCs) or valid NDCs were submitted 
for physician-administered drugs before October 1, 2012.  (A-09-16-02031)  
Identifying Misspent Funds and Addressing Improper Payments 
CMS Paid Practitioners for Telehealth Services That Did Not Meet Medicare Requirements. 
Medicare paid a total of $17.6 million in telehealth payments in 2015, compared with $61,302 in 
2001.  Medicare telehealth payments include a professional fee, paid to the practitioner 
performing the service at a distant site, and an originating-site fee, paid to the facility where the 
beneficiary receives the service.  HHS-OIG analyzed 2014 and 2015 (its audit period) telehealth 
claims and found that more than half of the professional telehealth claims paid by Medicare did 
not have matching originating-site facility fee claims.  Therefore, we focused our review on 
telehealth claims billed through a distant site that did not have a corresponding originating-site 
fee.  CMS paid practitioners for some telehealth claims associated with services that did not meet 
Medicare requirements.  For 31 of the 100 claims in its sample, telehealth services did not meet 
requirements.  The deficiencies that we identified occurred because CMS did not ensure that: 
(1) there was oversight to disallow payments for errors for which telehealth claim edits could not 
be implemented: (2) all contractor claim edits were in place; and (3) practitioners were aware of 
51  Medicare telehealth requirements.  (A-05-16-00058) 
Most Medicare Claims for Replacement Positive Airway Pressure Device Supplies Did Not 
Comply with Medicare Requirements.  Most Medicare claims that durable medical equipment 
(DME) suppliers submitted for replacement positive airway pressure (PAP) device supplies did 
not comply with Medicare requirements.  Of the 110 claims in HHS-OIGs sample that Medicare 
paid in 2014 and 2015, 86 claims did not comply with Medicare requirements.  Based on its 
sample results, HHS-OIG estimated that Medicare made overpayments of almost $631.3 million 
for replacement PAP device supply claims that did not meet Medicare requirements.  These 
overpayments occurred because CMS oversight of replacement PAP device supplies was not 
sufficient to ensure that suppliers complied with Medicare requirements or to prevent payment of 
claims that did not meet those requirements.  Without periodic reviews of claims for replacement 
supplies, Medicare contractors were unable to identify suppliers that consistently billed claims 
that did not meet Medicare requirements or to take remedial action.  (A-04-17-04056) 
CMS Did Not Detect Some Inappropriate Claims for Durable Medical Equipment in Nursing 
Facilities.  HHS-OIG found that CMS allowed $18.4 million in Medicare payments for 
inappropriate claims for DME provided during SNF stays not covered by Medicare, and may 
also have allowed additional inappropriate claims for DME provided in Medicaid-only nursing 
facilities.  CMS requires facilities to provide DME as a standard part of nursing care, and does 
not permit separate Medicare payment for DME except when Medicaid-only nursing facilities 
serve as beneficiary homes.  CMS uses two payment edits designed to identify and reject 
inappropriate claims, but neither edit rejected the claims because SNFs and DME suppliers did 
not submit full and accurate information required for processing.  (OEI-06-16-00380)  
The MEDIC Produced Some Positive Results but More Could be Done to Enhance its 
Effectiveness.  While the Medicare Drug Integrity Contractors (MEDIC) reported recoveries 
resulted in a positive return on investment ($3 in recoveries for every $1 invested in 2017), CMS 
has no measures that specifically assess the MEDICs effectiveness.  CMS directed the MEDIC 
to devote more resources to proactive data analysis and administrative actions in 2014 and 2015, 
which led to a sharp increase in proactive data analysis, but a decrease in the MEDIC resources 
available to follow up on the results of these analyses.  As a result, there have been fewer 
MEDIC investigations and referrals to law enforcement agencies, including OIG.  Through its 
increased proactive analyses, the MEDIC provided thousands of high-risk leads involving drugs, 
including opioids, to plan sponsors from 2014 through 2017.  The impact of these activities, 
however, cannot be measured as plan sponsors are not required to report to CMS the actions 
taken in response to these leads.  In addition, MEDIC staff described numerous barriers that 
limit the MEDICs overall impact.  (OEI-03-17-00310) 
Setting Medicare Payment Rates for Clinical Diagnostic Laboratory Tests: Strategies to Ensure 
Data Quality.  The Protecting Access to Medicare Act of 2014 (PAMA) requires CMS to set 
Medicare Part B payment rates for clinical diagnostic laboratory tests (lab tests) using private 
sector payment rates.  Under PAMA, labs report private payer rates for lab tests to CMS every 3 
years.  To provide oversight, PAMA mandated that HHS-OIG monitor Medicare payments for 
lab tests and CMSs implementation of the new payment system.  CMS issued new payment 
rates for lab tests that took effect on January 1, 2018.  Payment rates decreased for 75 percent of 
52  lab tests, which are generally in line with savings estimated in previous HHS-OIG reports.  
During the initial implementation of the new payment system, labs experienced some one-time 
challenges complying with the new data-reporting requirement.  However, CMSs limited data 
quality assurance efforts present an ongoing risk and HHS-OIG identified strategies to help CMS 
ensure that future payment rates are based on complete and accurate data.  (OEI-09-17-00050) 
Medicare Improperly Paid Providers for Nonemergency Ambulance Transports to Destinations 
Not Covered by Medicare.  Medicare made improper payments of $8.7 million to providers for 
nonemergency ambulance transports to destinations not covered by Medicare.  The majority of 
the improperly billed claim lines (59 percent) were for transports to diagnostic or therapeutic 
sites, other than a physicians office or a hospital that did not originate from SNFs.  As of the 
publication of this report, the total improper payment amount of $8.7 million included claim 
lines outside of the 4-year claim-reopening period.  (A-09-17-03018). 
Medicare Improperly Paid Providers for Items and Services Ordered by Chiropractors.  
Medicare payments for selected items and services ordered by chiropractors did not comply with 
Federal requirements.  Specifically, for calendar years 2013 through 2016, Medicare improperly 
paid providers $6.7 million.  Medicare overpaid providers because CMSs claim-processing edits 
were not fully effective in preventing overpayments.  CMS did not begin using these edits to 
deny claims until January 2014.  Of the improper payments for HHS-OIGs audit period, 89 
percent were for items and services provided before CMSs implementation of the edits.  (A-09-
17-03002) 
Medicare Made Improper and Potentially Improper Payments for Emergency Ambulance 
Transports to Destinations Other Than Hospitals or Skilled Nursing Facilities.  Medicare 
payments to providers for emergency ambulance transports did not comply or potentially did not 
comply with Federal requirements.  Specifically, for calendar years 2014 through 2016, 
Medicare made improper and potentially improper payments totaling $1.9 million: (1) improper 
payments of $975,154 for transports to destinations that were not covered by Medicare for either 
emergency or nonemergency ambulance transports: and (2) potentially improper payments of 
$928,092 for transports that may not have met Medicare coverage requirements or might have 
been paid by Medicare as nonemergency ambulance transports.  (A-09-17-03017) 
Medicare Improperly Paid Hospitals Millions of Dollars for Intensity-Modulated Radiation 
Therapy Planning Services.  Payments for outpatient intensity-modulated radiation therapy 
(IMRT) planning services did not comply with Medicare billing requirements.  On the basis of 
HHS-OIGs sample results, it estimated that Medicare overpaid hospitals nation-wide as much as 
$21.5 million for complex simulations billed during our audit period (calendar years 2013 
through 2015).  In addition, HHS-OIG identified $4.2 million in potential overpayments for other 
IMRT planning services that were not included in its sample.  In total, Medicare overpaid 
hospitals as much as $25.8 million during HHS-OIGs audit period.  For IMRT planning services 
billed in the 2 years after our audit period (for calendar years 2016 and 2017), HHS-OIG 
identified an additional $3.7 million in potential overpayments for complex simulations and $1.7 
million for other IMRT planning services.  In total, Medicare overpaid hospitals as much as $5.4 
million after HHS-OIGs audit period.  (A-09-16-02033) 
53  Medicare Payments for Clinical Diagnostic Laboratory Tests in 2017: Year 4 of Baseline Data.  
Medicare paid $7.1 billion under Part B for lab tests in 2017, a total that changed very little over 
4 years.  The top 25 tests by Medicare payments totaled $4.5 billion and represented 64 percent 
of all Medicare payments for lab tests in 2016.  More than half of payments for the top 25 tests 
went to 1 percent of labs.  Congress mandated that HHS-OIG monitor Medicare payments for lab 
tests and publicly release an annual analysis of the top 25 lab tests by Medicare payments.  The 
new payment system for lab tests took effect on January 1, 2018, and resulted in significant 
changes to the Medicare payment rates for lab tests.  (OEI-09-18-00410)  
Round 2 Competitive Bidding for Oxygen: Continued Access for Vast Majority of Beneficiaries.  
HHS-OIG found that Medicare payments for oxygen equipment and contents continued for the 
vast majority of beneficiaries in both Round 2 bidding areas and non-bidding areas, indicating 
that the Competitive Bidding Program likely did not disrupt their access.  The percentage of 
beneficiaries for whom Medicare payments did not continue was slightly higher in Round 2 
bidding areas than in non-bidding areas, which may or may not indicate disruptions in receiving 
needed oxygen equipment and contents for a very small proportion of beneficiaries.  (OEI-01-15-
00041) 
Round 2 Competitive Bidding for Enteral Nutrition: Continued Access for Vast Majority of 
Beneficiaries.  HHS-OIG found that Medicare payments for enteral nutrition supplies continued 
for the vast majority of beneficiaries in both Round 2 bidding areas and non-bidding areas, 
indicating that the Competitive Bidding Program likely did not disrupt their access.  The 
percentage of beneficiaries for whom Medicare payments did not continue was slightly higher in 
Round 2 bidding areas than in non-bidding areas, which may or may not indicate disruptions in 
receiving needed enteral nutrition supplies for a very small proportion of beneficiaries.  (OEI-01-
15-00042) 
Medicare Advantage Appeal Outcomes and Audit Findings Raise Concerns About Service and 
Payment Denials.  High overturn rates when beneficiaries and providers appeal denials, and 
CMS audit findings about inappropriate denials, raise concerns that some beneficiaries and 
providers may not be getting services and payment that Medicare Advantage Organizations 
(MAOs) are required to provide.  These findings are particularly concerning because 
beneficiaries and providers almost never use the appeals process designed to ensure access to 
care and payment.  (OEI-09-16-00410) 
Texas Did Not Make Increased Primary Care Provider Payments and Claim Reimbursement in 
Accordance With Federal Requirements.  Texas did not always make increased Medicaid 
payments to providers and claim reimbursement in accordance with Federal requirements.  Of 
the $721 million in Federal funds that it received, Texas inappropriately received $20.7 million 
because it: (1) incorrectly claimed the 100-percent matching rate for payments that were only 
eligible for the regular matching rate; and (2) made payments that were unallowable.  
Additionally, HHS-OIG is setting aside $1.1 million in Federal funds Texas received for 
payments that exceeded the providers actual billed charges.  Providers did not complete the 
billed charges field for some payment data with meaningful amounts, so HHS-OIG could not 
determine the correct payment amounts for the data.  (A-06-15-00045) 
54  Most of New Yorks Claims for Federal Reimbursement for Monthly Personal Emergency 
Response Service Charges Did Not Comply with Medicaid Requirements.  New York provides 
Personal Emergency Response Services (PERS) to eligible Medicaid beneficiaries through 
contracts negotiated between local social services districts (local districts) and PERS providers.  
Payment for PERS includes a monthly service charge for monitoring agency services.  For 87 of 
the 100 claims in HHS-OIGs sample, New York claimed Federal reimbursement for PERS 
monthly service charge claims that did not comply with Medicaid requirements.  On the basis of 
sample results, HHS-OIG estimated that New York improperly claimed at least $5.5 million in 
Federal Medicaid reimbursement.  New Yorks ineffective oversight of the PERS program 
leaves the program vulnerable to misuse of Federal funds and could potentially place 
beneficiaries at risk of harm. (A-02-15-01019) 
New York Claimed Federal Reimbursement for Consumer-Directed Personal Assistance Services 
That Did Not Meet Medicaid Requirements.  New Yorks consumer-directed personal assistance 
program (CDPAP) includes personal care, home health, and nursing services.  New York 
claimed Federal Medicaid reimbursement totaling more than $579 million for CDPAP services 
provided from January 2012 through June 2016.  For 27 of 120 sampled claims, New York 
claimed Federal reimbursement for CDPAP services claims that did not meet Medicaid 
requirements.  New York also claimed reimbursement for services provided after a 6-month 
authorization period had lapsed.  This occurred because New York did not effectively monitor 
the CDPAP for compliance with certain CDPAP requirements.  Based on sample results, HHS-
OIG estimated that New York improperly claimed at least $74.8 million in Federal Medicaid 
reimbursement during our audit period.  New Yorks lack of effective monitoring of the CDPAP 
leaves the program vulnerable to misuse of Federal funds and could potentially place 
beneficiaries at risk of harm.  (A-02-16-01026)  
Virginia Did Not Claim Some Medicaid Administrative Costs for Its Medallion 3.0 Waiver 
Program in Accordance With Federal Requirements.  Of the $220 million (Federal share) in 
administrative costs claimed for Virginias waiver program in State FYs 2016 and 2017, Virginia 
correctly claimed $211.2 million (Federal share).  However, we found that Virginia claimed $7.7 
million (Federal share) in unallowable waiver program administrative costs not identified in its 
Cost Allocation Plan (CAP).  In addition, Virginia incorrectly claimed $1.2 million (Federal 
share) in administrative costs that were misclassified as waiver program administrative costs.  
The misclassified expenditures did not directly benefit the waiver program but directly benefited 
a separate public welfare program, Virginias Childrens Health Insurance Program.  (A-03-17-
00200) 
California Claimed Millions of Dollars in Unallowable Federal Medicaid Reimbursement for 
Specialty Mental Health Services.  California did not always comply with Federal and State 
requirements when claiming Federal reimbursement for specialty mental health services (SMHS) 
expenditures.  On the basis of its sample results, HHS-OIG estimated that California claimed at 
least $180.6 million in unallowable Federal reimbursement.  California claimed unallowable 
Federal reimbursement because its oversight was not effective in ensuring that its SMHS claims 
complied with Federal and State requirements.  Although California issued guidance and 
provided training and technical support to its county-run managed care mental health plans 
(health plans), the plans continued to report to California unallowable expenditures as allowable 
55  expenditures.  In addition, although Californias triennial reviews were effective in identifying 
unallowable expenditures, California did not ensure that adequate corrective action was taken.  
HHS-OIG found repeat deficiencies at some health plans.  (A-09-15-02040) 
California Created a Medicaid Program Vulnerability by Reporting Placeholders That Did Not 
Represent Actual Expenditures Supported by Documentation.  California reported SMHS 
placeholders totaling $47.5 million for FY 2013 that did not represent actual expenditures 
supported by documentation.  California did not have policies and procedures to ensure that 
supporting documentation for the placeholders was: (1) available at the time the Form CMS-64 
(the CMS-64) was filed; and (2) retained.  Californias reporting of placeholders created a 
program vulnerability: California could have withdrawn funds related to the unsupported 
placeholders that CMS had not acted to defer before the 60-day deadline as required by Federal 
regulations or to disallow.  According to its placeholder record, California reported for FY 2013 
additional placeholders totaling $1.2 billion for other types of Medicaid expenditures.  (A-09-15-
02027) 
Alaska Received Millions in Unallowable Bonus Payments.  Under the Childrens Health 
Insurance Program Reauthorization Act of 2009, Congress appropriated $3.2 billion for 
qualifying States to receive bonus payments to offset the costs of increased enrollment of 
children in Medicaid.  Some of the bonus payments that Alaska received for the audit period 
were not allowable in accordance with Federal requirements.  While most of the data used in 
Alaskas bonus payment calculations were in accordance with Federal requirements, Alaska 
overstated its FYs 2009 through 2013 current enrollment in its bonus requests to CMS because it 
included individuals who did not qualify because of their basis-of-eligibility category.  As a 
result of the overstated current enrollment numbers, CMS overpaid Alaska almost $8.9 million in 
bonus payments.  (A-04-17-08059) 
Opioid Use in Medicare Part D Remains Concerning.  HHS-OIG found that nearly one in three 
beneficiaries received a prescription opioid through Medicare Part D in 2017, a slight decrease 
from 2016.  Overall Part D spending for opioids also decreased, from $4.0 billion in 2016 to $3.4 
billion for opioids in 2017.  This decrease was due in part to declining prices.  Almost 460,000 
beneficiaries received high amounts of opioids in 2017, fewer than in 2016.  Of these, about 
71,000 beneficiaries were at serious risk of opioid misuse or overdose, also fewer than in 2016.  
These 71,000 beneficiaries received extreme amounts of opioids or appeared to be doctor 
shopping.  Moreover, almost 300 prescribers had questionable prescribing patterns for 
beneficiaries who are at serious risk.  Ensuring the appropriate use and prescribing of opioids is 
essential to protecting the health and safety of beneficiaries and the integrity of Part D.  (OEI-02-
18-00220) 
Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2018.  HHS-OIG 
found that the rate of Part D plan formularies inclusion of the drugs commonly used by dual 
eligible (i.e., individuals who are eligible for both Medicare and Medicaid) is high, with some 
variation.  Because some variation exists in formularies inclusion of these drugs and in their 
application of utilization management tools to the drugs, some dual eligibles may need to use 
alternative methods to access the drugs they take.  (OEI-05-18-00240) 
56  Analysis Toolkit: Calculating Opioid Levels to Identify Patients at Risk of Misuse or Overdose.  
This toolkit provides detailed steps for using prescription drug claims data to analyze patients 
opioid levels and identify certain patients who are at risk of opioid misuse or overdose.  It is 
based on the methodology that HHS-OIG has developed in its extensive work on opioids.  It is 
intended to assist its partners, such as Medicare Part D plan sponsors, private health plans, and 
State MFCUs, with analyzing their own prescription drug claims data to help combat the 
opioid crisis.  (OEI-02-17-00560)  
Vulnerabilities in the Medicare Hospice Program Affect Quality Care and Program Integrity: An 
OIG Portfolio.  Hospice use has grown steadily over the past decade, with Medicare paying 
$16.7 billion for this care for 1.4 million beneficiaries in 2016.  However, HHS-OIG has 
identified vulnerabilities in the program.  HHS-OIG found that hospices do not always provide 
needed services to beneficiaries and sometimes provide poor quality care.  Also, beneficiaries 
and their families and caregivers do not receive crucial information to make informed decisions 
about care.  Further, hospices inappropriate billing costs Medicare hundreds of millions of 
dollars.  Lastly, the current payment system creates incentives for hospices to minimize their 
services and seek beneficiaries who have uncomplicated needs.  (OEI-02-16-00570)  
Questionable Billing for Compounded Topical Drugs in Medicare Part D.  HHS-OIG found that 
Medicare Part D spending for compounded topical drugs was 24 times higher in 2016 than it was 
in 2010 and that nearly 550 pharmacies had questionable Part D billing for compounded topical 
drugs in 2016.  This explosive growth and identification of pharmacies raises concerns about 
fraud and abuse.  (OEI-02-16-00440)  
Open Payments Data: Review of Accuracy, Precision, and Consistency in Reporting.  The Open 
Payments program promotes transparency by making available to the public the financial 
relationships that physicians and teaching hospitals have with applicable manufacturers and 
group purchasing organizations.  Of 11.9 million records published on the Open Payments 
website for 2015, less than 1 percent were missing required data elements.  Although the Open 
Payments data elements reported to CMS were complete overall, HHS-OIG identified records 
that contained inaccurate, imprecise, or inconsistent information.  The Open Payments program 
can benefit the public only if the data reported are complete and accurate.  As such, potential 
issues with these data may undermine the public benefit of this program.  (OEI-03-15-00220)  
CMSs Policies and Procedures Were Generally Effective in Ensuring That Prescription Drug 
Coverage Capitation Payments Were Not Made After the Beneficiaries Dates of Death.  CMS 
had policies and procedures in place that were generally effective in ensuring that capitation 
payments to Medicare Advantage organizations prescription drug plans and stand-alone 
prescription drug plans (collectively referred to as sponsors) for Medicare Part D coverage 
were not made on behalf of deceased beneficiaries after the individuals dates of death.  These 
policies and procedures generally ensured that CMS did not make improper capitation payments 
on behalf of deceased beneficiaries when its data systems indicated at the time of a monthly 
capitation payment that the beneficiaries in question had died.  CMS did not, however, identify 
and recoup all improper capitation payments.  As of March 7, 2017, CMS had not recouped $1.1 
million associated with 65,398 separate capitation payments.  For HHS-OIGs audit period, these 
improper payments represented .0004 percent of the total capitation payments made to sponsors 
57  and .097 percent of the total adjustments that CMS made after receiving information on 
beneficiaries dates of death.  (A-07-16-05088) 
CMS Did Not Always Provide Accurate Medicaid Unit Rebate Offset Amounts to State Medicaid 
Agencies.  CMS did not always provide accurate Medicaid unit rebate offset amounts (UROAs) 
to States from 2010 through 2014 in accordance with Federal guidance.  (Under the Medicaid 
drug rebate program, drug manufacturers enter into rebate agreements with the Federal 
Government and pay rebates to States.  Amounts collected by the States that are attributable to 
increased rebates mandated by recent legislationUROAsare applied against the amounts that 
the Federal Government pays to the States.)  CMS did not update the quarterly UROA 
information that it sent to the States to include changes to the UROAs when covered drugs best 
prices changed but the unit rebate amounts stayed the same.  The States would have used these 
incorrect UROA amounts to calculate rebates, which would have resulted in incorrect rebate 
amounts being claimed.  (A-07-17-06074) 
Increases in Reimbursement for Brand-Name Drugs in Part D.  HHS-OIG found that Part D 
reimbursement for brand-name drugs increased at a pace greater than the rate of inflation while 
utilization for these drugs decreased.  Specifically, total reimbursement for all brand-name drugs 
in Part D increased 77 percent from 2011 to 2015, while utilization decreased 17 percent across 
the 5 years.  Continued increases in reimbursement for brand-name drugs may have long-term 
effects on Medicare and its beneficiaries, especially those beneficiaries who need access to 
expensive maintenance drugs.  (OEI-03-15-00080) 
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2016 Average Sales 
Prices.  Based on 2016 data, CMS lowered Part B reimbursement for 16 drugs, saving Medicare 
and its beneficiaries $13.1 million over 1 year.  This finding highlights the success of HHS-
OIGs mandated quarterly comparisons of average sales prices with average manufacturer prices 
and implementation of CMSs current price-substitution policy.  HHS-OIG continues to 
recommend that CMS expand the price-substitution criteria.  (OEI-03-18-00120) 
Opioids in Ohio Medicaid: Review of Extreme Use and Overprescribing.  HHS-OIG found that 
more than 700 beneficiaries are at serious risk of prescription opioid misuse or overdose and that 
nearly 50 prescribers stood out by ordering opioids for more of these beneficiaries than other 
prescribers.  HHS-OIGs results underscore the tenacity of the opioid crisis and the importance 
of Ohios ongoing commitment to addressing it.  HHS-OIG encourages Ohio to continue its 
ongoing efforts to explore new strategies to address its opioid crisis and look for ways to 
improve its existing strategies.  (OEI-05-18-00010) 
CMSs Policies and Procedures Were Generally Effective in Ensuring That Capitation Payments 
Were Not Made After Beneficiaries Dates of Death.  CMS had policies and procedures in place 
that were generally effective in ensuring that capitation payments to Medicare Advantage 
organizations for Medicare Parts A and B services were not made on behalf of deceased 
beneficiaries after the individuals dates of death.  During CY 2012 through 2015, CMS received 
updated beneficiary date-of-death information and then made approximately 1.8 million 
adjustments to capitation payments, thereby recouping $2.96 billion from Medicare Advantage 
organizations for Parts A and B capitation payments that had been made on behalf of 
58  beneficiaries who had died.  CMS did not, however, identify and recoup all improper capitation 
payments.  As of March 7, 2017, CMS had not recouped $2.4 million associated with 1,817 
capitation payments that were made on behalf of 978 beneficiaries.  For HHS-OIGs audit 
period, these improper payments represented .0004 percent of the total capitation payments made 
to Medicare Advantage organizations and .08 percent of the total adjustments that CMS made 
after receiving information on beneficiaries dates of death.  (A-07-16-05087) 
CMS Generally Met Requirements in Round 2 of the DMEPOS Competitive Bidding Program.  
CMS usually selected Durable Medical Equipment Prosthetics, Orthotics, and Supplies 
(DMEPOS) suppliers, calculated the sampled DMEPOS single-payment amounts (SPAs), and 
monitored suppliers in accordance with its established procedures and applicable Federal 
requirements.  HHS-OIG determined that CMS consistently followed its established program 
procedures and applicable Federal requirements for 192 of the 215 winning suppliers associated 
with the sampled SPAs reviewed.  While the overall effect on Medicare payments to suppliers 
was relatively small, HHS-OIG determined that CMS did not consistently follow its established 
procedures and applicable Federal requirements for selecting suppliers during the bid process for 
23 of the 215 winning suppliers.  This affected 99 of the 240 sampled SPAs.  On the basis of 
HHS-OIGs sample, HHS-OIG estimated that CMS paid suppliers $182,000 less than they would 
have received without any errors, or less than 0.03 percent of the $553.7 million paid under 
Round 2 during the last 6 months of 2013.  (A-05-14-00049) 
CMS Did Not Adequately Address Discrepancies in the Coding Classification for Kwashiorkor.  
Providers incorrectly billed diagnosis code 260 for Kwashiorkor for inpatients who did not have 
the disease.  In separately issued reports, HHS-OIG reviewed the medical records for a total of 
2,145 inpatient claims at 25 providers and found that all but 1 claim incorrectly included the 
diagnosis code for Kwashiorkor, resulting in overpayments in excess of $6 million.  The ICD-9 
coding classification contained a discrepancy between the tabular list and the alpha index on the 
use of diagnosis code 260, which may have resulted in other diseases being assigned this code.  
CMS did not have adequate policies and procedures in place to address this discrepancy, 
resulting in a total potential loss of approximately $102 million during CYs 2006 through 2014.  
Even though CMS was aware of the discrepancy, it did not take any separate action to address it.  
While previous reviews successfully returned $5.7 million to the Medicare Trust Fund, HHS-
OIG estimates that Medicare could have saved approximately $102 million from CYs 2006 
through 2014 if the coding discrepancy had been immediately corrected.  (A-03-14-00010) 
Wisconsin Physicians Service Paid Providers for Hyperbaric Oxygen Therapy Services That Did 
Not Comply with Medicare Requirements.  Hyperbaric oxygen (HBO) therapy involves giving a 
high concentration of oxygen within a pressurized chamber in which the patient intermittently 
breathes in 100-percent oxygen.  Wisconsin Physicians Service (WPS) paid 73 providers for 
HBO therapy services that did not comply with Medicare requirements.  WPS made payments 
for HBO therapy that did not always comply with Medicare requirements because it had limited 
policies and procedures in place to ensure that it made correct payments.  Based on its sample 
results, HHS-OIG estimated that WPS overpaid providers in Jurisdiction 5 $42.6 million during 
the audit period for HBO therapy that did not comply with Medicare requirements.  (A-01-15-
00515) 
59  Medicare Improperly Paid Providers for Specimen Validity Tests Billed in Combination with 
Urine Drug Tests.  Medicare improperly paid 4,480 clinical laboratories and physician offices a 
total of $66.3 million for specimen validity tests billed in combination with urine drug tests.  
CMS officials explained that medically necessary tests used to diagnose certain conditions 
(which include the same tests that can be used to validate urine specimens) that are performed on 
the same day as a urine drug test for a single beneficiary should be a rare occurrence.  The 
improper payments occurred because providers did not follow existing Medicare guidance, and 
CMSs system edits were not adequate to prevent payment for specimen validity tests billed in 
combination with urine drug tests.  Although CMS implemented a system edit designed to 
identify and prevent these improper payments, HHS-OIG still identified $1.8 million in improper 
payments from April 1 through December 31, 2016.  At this observed rate, these improper 
payments would total $12.1 million over a 5-year period.  (A-09-16-02034) 
Hospitals Did Not Comply with Medicare Requirements for Reporting Certain Cardiac Device 
Credits.  All 296 payments reviewed for recalled cardiac medical devices did not comply with 
Medicare requirements for reporting manufacturer credits.  Medicare contractors incorrectly paid 
hospitals $7.7 million for cardiac device replacement claims rather than the $3.3 million they 
should have been paid, resulting in potential overpayments of $4.4 million.  For all payments 
reviewed, manufacturers issued reportable credits to hospitals for recalled cardiac medical 
devices, but the hospitals did not adjust the claims with the proper condition codes, value codes, 
or modifiers to reduce payment as required.  The overpayments occurred because Medicare 
controls were not sufficient to ensure that hospitals properly reported manufacturer credits for 
cardiac devices.  (A-05-16-00059) 
Excluding Non-Covered Versions When Setting Payment for Two Part B Drugs Would Have 
Resulted in Lower Drug Costs for Medicare and its Beneficiaries.  HHS-OIG found that CMS 
and a Federal court interpret the law to require the inclusion of average sales prices for 
noncovered versions in limited circumstances when setting payment amounts for Part B drugs.  
As a result, the inclusion of noncovered versions of two drugs caused Medicare and its 
beneficiaries to pay an extra $366 million from 2014 through 2016.  (OEI-12-17-00260) 
Many Inpatient Rehabilitation Facility Stays Did Not Meet Medicare Coverage and 
Documentation Requirements.  Inpatient rehabilitation facilities (IRFs) did not comply with all 
Medicare coverage and documentation requirements specified for reasonable and necessary care.  
For 175 of 220 stays that HHS-OIG sampled, which corresponded to 135 IRFs, medical record 
documentation did not support that IRF care was reasonable and necessary in accordance with 
Medicares requirements.  Based on its sample results, HHS-OIG estimated that Medicare paid 
IRFs nation-wide $5.7 billion in 2013 for care to beneficiaries that was not reasonable and 
necessary.  (A-01-15-00500) 
Promoting Quality and Safety in Health Care 
Follow-up Review: CMSs Management of the Quality Payment Program.  CMS continued its 
progress toward implementing the Quality Payment Program (QPP), a set of clinician payment 
reforms designed to put increased focus on the quality and value of care.  During 2017, CMS 
made significant efforts to address the two vulnerabilities that HHS-OIG identified in its 2016 
60  management review developing IT systems and preparing clinicians to participate in the QPP.  
CMS appears on track to deploy the IT systems needed for data submission by January 1, 2018.  
Regarding clinician readiness, CMS has conducted outreach, communicated eligibility 
information, issued subregulatory guidance, awarded technical assistance contracts, and 
established a Service Center to respond to questions.  Clinician feedback demonstrates 
widespread awareness of the QPP, but also uncertainty about eligibility, data submission, and 
other elements of the program.  Regarding emerging challenges, HHS-OIG found that CMS has 
not yet developed a comprehensive program integrity plan.  HHS-OIG identified two 
vulnerabilities that are critical for CMS to address in 2018: (1) if clinicians do not receive 
sufficient technical assistance, they may struggle to succeed under the QPP or choose not to 
participate; and (2) if CMS does not develop and implement a comprehensive QPP program 
integrity plan, the program will be at greater risk of fraud and improper payments.  (OEI-12-17-
00350)  
Minnesota Did Not Comply With Federal Waiver and State Requirements for 18 of 20 Family 
Adult Foster Care Homes Reviewed  
Minnesota did not comply with Federal waiver and State requirements in overseeing homes that 
serve vulnerable adults who receive services through the program.  We determined that 18 of the 
20 homes we reviewed did not comply with 1 or more State licensing requirements.  
Specifically, we found 64 instances of noncompliance related to health and safety and 
administrative requirements.  County licensor supervisors stated that instances of noncompliance 
occurred mainly because of low staffing levels and a lack of training opportunities for license 
holders (providers) and county licensors.  Additionally, specific State licensing requirements on 
the necessity of safeguarding hazardous materials were unclear. 
Minnesota partially concurred with our recommendations that they (1) ensure that the 64 
instances of noncompliance with health and safety and administrative requirements identified in 
this report are corrected; and (2) work with counties to ensure the health and safety of vulnerable 
adults by considering staffing standards and caseload thresholds for county agencies.  Minnesota 
also fully concurred with recommendations that they (1) review training opportunities available 
to providers and county licensors and improve or increase them as needed; and (2) insurance that 
Minnesota guidance accurately reflects administrative requirements related to hazardous 
materials.  In addition, Minnesota outlined its plans for corrective actions, which include 
updating State guidance and developing training materials and licensor training specific to home 
safety. (A-05-16-00044) 
Minnesota Did Not Comply With Federal Waiver and State Requirements for All 20 Adult Day 
Care Centers Reviewed; Illinois Did Not Comply With Federal Waiver and State Requirements 
at 18 of 20 Adult Day Service Centers Reviewed; Mississippi Did Not Comply With Federal 
Waiver and State Requirements at All 20 Adult Day Care Facilities Reviewed  
Minnesota, Illinois, and Mississippi did not comply with Federal waiver and State requirements 
in overseeing providers that serve vulnerable adults receiving adult day care services.  In 
Minnesota, we found 200 instances of noncompliance with health and safety and administrative 
requirements at all 20 of the centers we reviewed.  In Illinois, we found 105 instances of 
noncompliance at 18 of the 20 centers we reviewed.  In Mississippi, we found 564 instances of 
61  noncompliance at all 20 of the centers we reviewed. 
Minnesota said that the instances of noncompliance occurred because low staffing levels did not 
allow State licensors to make relicensing visits every 2 years.  Additionally, Minnesota and the 
centers indicated that there was a need to develop templates for administrative records that the 
State requires.  Illinois said that most instances of noncompliance occurred because center 
personnel did not have sufficient training on State requirements.  Although Illinois offers initial 
training to new centers, more State-led training is needed for established centers.  According to 
Mississippi, budget reductions and low auditor staffing levels limited its oversight and 
monitoring of provider facilities, staffing, and training, and the lack of State licensing 
requirements contributed to provider noncompliance.  
Minnesota, Illinois, and Mississippi concurred with our recommendations that they (1) ensure 
that the instances of noncompliance with health and safety and administrative requirements are 
corrected and (2) improve their oversight of staffing, training, and administration. (A-05-17-
00009, A-05-17-00028, A-04-17-00116) 
Other HHS-OIG Fraud and Abuse Prevention Activities 
Data Analytics 
As described above, HCFAC funding supported HHS-OIGs continued enhancement of HHS-
OIGs technology and data analysis capabilities for detecting health care fraud.  For example, 
HHS-OIG continues to use several approaches for monitoring and analyzing health care 
payments and trends, and sophisticated data analytics and statistical modeling target the 
oversight of the Medicare and Medicaid programs.  OIG has developed analytic tools to 
automate work formerly conducted by multi-disciplinary teams.  These tools use near real time 
data to examine Medicare data for high-risk providers, conduct peer comparisons, to calculate 
ratios of allowed services as compared with national averages, as well as other 
assessments.  When united with the expertise of HEAT and other partners, HHS-OIGs data 
analysis supports a highly effective combination of cutting edge technologies and traditional 
skills to fight against fraud, waste, and abuse.  
Industry Outreach and Guidance 
HHS-OIG strives to cultivate a culture of compliance in the health care industry through various 
educational and outreach efforts. 
Advisory Opinions   
HIPAA established an advisory opinion process through which parties may obtain binding legal 
guidance as to whether their existing or proposed health care business transactions run afoul of 
the AKS, the CMP laws, or the exclusion provisions.  During FY 2018, the HHS-OIG, in 
consultation with DOJ, issued 14 advisory opinions and rescinded one advisory opinion.  A total 
of 366 advisory opinions and 21 modifications to advisory opinions have been issued, four 
opinions have been terminated, and one opinion has been rescinded during the 22 years of the 
HCFAC program. 
62  Collaborations with Private Sector Partners  
HHS-OIG regularly engages with public stakeholders to combat fraud.  For example, HHS-OIG 
is an active partner in the HFPP, described in more detail elsewhere in this report, and with the 
National Healthcare Anti-Fraud Association, both of which are publicprivate partnerships that 
address health care fraud by sharing data and information for the purposes of detecting and 
combatting fraud and abuse in health care programs.  HHS-OIG frequently shares information 
about prescription-drug fraud schemes, trends, and other matters related to health care fraud, as 
appropriate.  As a further example, HHS-OIG has collaborated with the DEA to provide anti-
fraud education at numerous Pharmacy Diversion Awareness Conferences held across the United 
States.  The conferences were designed to assist pharmacy personnel with identifying and 
preventing diversion activity.  Since 2013, HHS-OIG has presented at conferences in 50 States 
and Puerto Rico.  
HHS-OIG also engages with the industry to promote best practices for compliance.  For 
example, HHS-OIG hosted a roundtable with industry compliance professionals to discuss 
methods for measuring the effectiveness of compliance programs.  The ideas discussed at the 
roundtable were compiled into a resource guide for other industry participants to consider when 
evaluating their own compliance programs.  In addition to the compliance roundtable, HHS-OIG 
regularly presents at various health care compliance conferences throughout the country. 
Centers for Medicare & Medicaid Services 
In FY 2018, CMS received an allocation of $12.0 million by HHS and appropriated $584.8 
million in discretionary funds by Congress to support its comprehensive program integrity 
strategy for Medicare, Medicaid, and the Childrens Health Insurance Program (CHIP).  In FY 
2018, Congress required HHS to fund the Administration for Community Livings (ACL) Senior 
Medicare Patrols activity.  Therefore, $18.0 million of CMSs $584.8 million in discretionary 
funding was allocated to ACL to support the program.  With these funds, CMS is working to 
ensure that public funds are not diverted from their intended purpose: to make accurate payments 
to legitimate entities for allowable services or activities on behalf of eligible beneficiaries of 
federal health care programs.  
CMS also performs many program integrity activities that are beyond the scope of this report 
because they are not funded directly by the HCFAC Account or discretionary HCFAC funding. 
Medicare Fee-for-Service (FFS) and Medicaid improper payment rate measurement and other 
Medicaid program integrity activities, Recovery Audit Contractor activities, and prior 
authorization initiatives are discussed in detail in separate reports. CMS will also submit an 
annual Medicare and Medicaid Integrity Program report to Congress later this year. 
Address the Full Spectrum of Fraud, Waste, and Abuse 
CMS uses a multi-faceted approach to target all causes of fraud, waste, and abuse that result in 
improper payments, with an emphasis towards prevention activities.  CMSs approach to 
program integrity is guided by four major principles: 
63   Prevention - Increase CMSs capability to stop improper claims before they are paid by 
enhancing existing processes and increasing analytic capabilities. 
 Detection - Foster collaboration with HCFAC partners, including various components 
of HHS, DOJ, states, and other stakeholders with a shared interest in the integrity of the 
national health care system. 
 Recovery - Identify and recover overpayments.  CMS will continue to work with its 
contractors and partners, including the HHS/OIG, DOJ, state agencies for survey and 
certification, and state Medicaid agencies to pursue appropriate corrective actions such as 
restitution, fines, penalties, damages, and program suspensions or exclusions. 
 Transparency and Accountability - Develop and deploy a comprehensive program 
integrity communication plan to share key messages and information with internal and 
external stakeholders.  Performance measures are also being developed to evaluate 
operations and outcomes against other CMS reporting activities.  
During FY 2018, CMS continued to integrate Medicare and Medicaid efforts and provide 
technical assistance and education to states, providers, and other stakeholders; and conduct 
Medicare and Medicaid fraud investigations and provider audits, as well as state program 
integrity reviews.  
This section describes the wide range of program integrity activities that CMS utilizes to 
comprehensively address fraud, waste, and abuse.  These activities include many different 
approaches to program integrity, such as data analysis, investigations and audits, recovery 
actions, and outreach and education. 
Unified Program Integrity Contractor (UPIC)  
In FY 2016, CMS began consolidating the Medicare and Medicaid program integrity functions 
performed by the Zone Program Integrity Contractors (ZPICs), including Medicare-Medicaid 
Data Match (Medi-Medi) activities, and the Audit Medicaid Integrity Contractors (MICs) into 
the Unified Program Integrity Contractors (UPICs).  The UPICs merge these separate contracting 
functions into a single contractor, in a geographic area, with responsibility to conduct program 
integrity audit and investigation work across Medicare and Medicaid operations.  The UPIC 
structure provides CMS with a flexible contracting vehicle to address the complex landscape of 
program integrity.  Currently, all UPICs are fully operational and are carrying out program 
integrity activities in five jurisdictions: Midwest, Northeast, West, Southeast and Southwest.   
Fraud Prevention System (FPS) 
The Fraud Prevention System is the predictive analytics technology required under the Small 
Business Jobs Act of 201015 (SBJA). FPS analyzes FFS claims using sophisticated algorithms to 
                                                 
15 Public Law 111-240. 
64  target investigative resources; generate alerts for suspect claims or providers and suppliers; and 
provide information to facilitate and support investigations of the most egregious, suspect, or 
aberrant activity.  HHS uses the FPS information to prevent and address improper payments 
using a variety of administrative actions, including claim denials, payment suspensions, 
Medicare billing privilege revocations, and law enforcement referrals.  In March 2017, HHS 
updated the FPS to modernize the system and user interface, improve model development time 
and performance measurement, and expand program integrity capabilities.  
During FY 2017, the FPS models generated 416 leads that were included in the ZPIC and 
UPICs workload, resulting in 172 new investigations and augmented information for 244 
existing investigations. (FY 2018 numbers were not available at the time of this report.) 
National Correct Coding Initiative (NCCI) 
Medicare 
Given the volume of claims processed by Medicare each day and the significant cost associated 
with conducting medical review of an individual claim, CMS uses automated edits to help 
prevent improper payment without the need for manual intervention.  The National Correct 
Coding Initiative (NCCI) consists of edits designed to reduce improper payments in Medicare 
Part B.  NCCI Procedure-to-Procedure (PTP) edits prevent inappropriate payment for billing 
code pairs that should not be reported together by the same provider for the same beneficiary and 
date of service. NCCI Medically Unlikely Edits (MUEs) prevent payment for an inappropriate 
quantity of the same service rendered by the same provider for the same beneficiary on the same 
date of service.  During the first nine months of FY 2018, NCCI PTP edits and MUEs saved the 
Medicare program $176.7 million and $328.6 million, respectively. 
Medicaid  
Section 1903(r) of the Social Security Act requires states to use NCCI methodologies to process 
applicable Medicaid claims.  CMS continues to provide assistance for state Medicaid agencies to 
use NCCI methodologies in their Medicaid programs.  
Integrated Data Repository and the One Program Integrity (One PI) Portal  
CMS continues to augment the data available in the Integrated Data Repository (IDR) to provide 
a comprehensive view of Medicare and Medicaid data including claims, beneficiary data, and 
prescription drug information.  CMS is using the IDR to provide broader and easier access to 
data and enhanced data integration while strengthening and supporting CMSs analytical 
capabilities. The IDR contains Medicare Part A, Part B (including DME), Part C (encounter 
data), and Part D paid claims beginning with January 2006, both before and after final payment. 
This allows for analytics on historical data to develop models for use in the FPS.   
CMS continues to integrate new data sources into the IDR. CMS has added Shared Systems 
location data for pre-adjudicated claims, claims submitter, and medical review utilization data.   
65  CMS is also working to incorporate state Medicaid data into the IDR through standard 
Transformed Medicaid Statistical Information System (T-MSIS) data formats, while also 
working with states to improve the quality and consistency of the data from each state, described 
more fully below. 
CMS uses the One PI web-based portal in conjunction with the IDR to facilitate data sharing 
with program integrity contractors and law enforcement. The portal provides a single access 
point to the data within the IDR, as well as the analytic tools to review the data. 
The Command Center 
The Command Center opened in July 2012 and provides an opportunity for Medicare and 
Medicaid policy experts, law enforcements officials from HHS-OIG and the DOJ, including the 
FBI, state law enforcement officials, clinicians, and CMS fraud investigators to collaborate 
before, during, and after the development of fraud leads in real time.  The Command Centers 
advanced technologies and collaborative environment allow multi-disciplinary teams of experts 
and decision makers to more efficiently coordinate policies and case actions, reduce duplication 
of efforts, and streamline fraud investigations for more immediate administrative action. These 
collaborative activities enable CMS to take administrative actions, such as revocations of 
Medicare billing privileges and payment suspensions, more quickly and efficiently. In FY 2018, 
30 missions were conducted in the Command Center that included participants from CMS and 
CMS partners, including the FBI. 
Durable Medical Equipment (DME) Initiatives 
DME suppliers pose a high risk of fraud to the Medicare program and CMS has undertaken an 
aggressive strategy to address this risk.  ZPICs and UPICs and Program Safeguard Contractors 
(PSCs) have continued to conduct site visits and interviews of DME suppliers, providers, and 
beneficiaries receiving DME products in high billing areas for DME supplies and products.  In 
FY 2018 these additional funds supported DME investigations, which included site visits to, and 
interviews of, suppliers, doctors, and patients that were identified as potentially suspicious or 
high risk. 
Proactively Manage Provider Screening and Enrollment 
Provider enrollment is the gateway to the Medicare and Medicaid programs and is the key to 
preventing ineligible providers, and suppliers from entering either program.  CMS is committed 
to maintaining operational excellence in its provider enrollment and screening process.  Through 
provider screening and enrollment, CMS continues to prevent and reduce fraud, waste, and abuse 
in the Medicare and Medicaid programs and ensure that only eligible providers are caring for 
beneficiaries and receiving payment. 
66  Medicare Provider Screening and Site Visits 
CMS implemented additional screening provisions through a final rule16 published by the 
Federal Register on February 2, 2011. CMSs regulation establishes three levels of provider and 
supplier enrollment risk-based screening:  limited, moderate, and high, and each provider 
and supplier specialty category is assigned to one of these three screening levels.  Providers and 
suppliers designated in the limited risk category undergo verification of licensure and a wide 
range of database checks to ensure compliance with all provider- or supplier-specific 
requirements.  Providers and suppliers designated in the moderate risk category are subject to 
unannounced site visits in addition to all the requirements in the limited screening level  
Providers and suppliers in the high risk category are subject to fingerprint-based criminal 
background checks (FCBCs) in addition to all of the requirements in the limited and 
moderate screening levels.  For Medicare, CMS began phasing in the fingerprinting 
requirements on August 6, 2014.  In FY 2018, CMS denied approximately 771 enrollments and 
revoked five enrollments as a result of the FCBCs or a failure to respond. 
The Advanced Provider Screening system (APS) automatically screens all current and 
prospective providers and suppliers against a number of data sources, including provider and 
supplier licensing and criminal records to identify and highlight potential program integrity 
issues for proactive investigation by CMS.  In FY 2018, APS resulted in more than 1 million 
screenings. These screenings generated more than 29,000 potential licensure alerts, and more 
than 560 criminal alerts for potentially fraudulent providers for further review by CMS.  Such 
review resulted in approximately 119 criminal revocations and over 250 licensure revocations. 
Site visits are a screening mechanism used to prevent questionable providers and suppliers from 
enrolling or maintaining enrollment in the Medicare program.  The CMS-authorized site-visit 
contractors validate that the provider or supplier complies with Medicare enrollment 
requirements during these visits.  In FY 2018, the initiative resulted in 38,484 site visits 
conducted by the National Site Visit Contractor (NSVC), which conducts site visits for most 
Medicare FFS providers and suppliers, and 34,155 conducted by the National Supplier 
Clearinghouse (NSC), which conducts site visits for Medicare DME suppliers.  This work 
resulted in about 140 revocations due to non-operational site visit determinations for all 
providers and suppliers. 
CMSs provider screening and enrollment initiatives in Medicare have had a significant impact 
on removing ineligible providers from the program.  In FY 2018, CMS deactivated over 158,000 
enrollments, and revoked about 1,950 enrollments.  Site visits, revalidation, and other initiatives 
have contributed to the deactivation17 and revocation18 of more than one million enrollment 
records since CMS started implementing these screening and enrollment requirements.  
                                                 
16 76 FR 5862 (Feb. 2, 2011). 
17 Deactivation means the providers or suppliers billing privileges were stopped, but can be restored upon the 
submission of updated information.  See 42 CFR 424.540. 
18 Revocation means the providers or suppliers billing privileges are terminated.  See 42 CFR 424.535. 
67  Provider Enrollment, Chain and Ownership System (PECOS) 
PECOS is the system of record for all Medicare Provider/Supplier enrollment data, which 
includes Part A, Part B, and DME. It is the Internet-based system that providers and suppliers 
use to enroll, revalidate, or make changes to their enrollment information in the Medicare FFS 
program.  PECOS stores all information furnished by providers and suppliers; tracks all 
enrollment processing and the results of Medicare Administrative Contractor (MAC) evaluation; 
and provides feeds to FFS claims payment systems which are used in processing all claims. 
Medicare FFS claims processing cannot occur without provider/supplier enrollment information 
from PECOS. All provider/supplier updates and validations, both systematic and those 
performed manually by MACs, are stored and sent by PECOS. It is integrated with and supports 
multiple enterprise systems and CMS operations such as the Promoting Interoperability 
Programs and DMEPOS competitive bidding, providing direct access to information on the 
relationships between individuals and organizations stored in enrollment records. The Promoting 
Interoperability Programs system cannot function without PECOS and it is the base data used by 
FPS and groups such as ZPICs, RACs, OIG, and State PI Programs. 
PECOS is the source for vetting CMSs Accountable Care Organization programs and models 
and provides information that is used as a primary factor to determine program and model 
eligibility. PECOS supports data transparency through interfacing with programs such as: Open 
Payments, Physician Compare, and Nursing Home Compare, and also supports CMS data 
management initiatives through Master Data Management (MDM) and IDR. State Medicaid 
programs also rely on data-sharing efforts to support requirements for screening providers. CMS 
is focused on transitioning PECOS to a modernized, enterprise resource that is a platform for all 
provider/supplier enrollments across Medicare, Medicaid, and emerging programs. This single 
platform is intended to allow for streamlining and consistency in user workflows, as well as the 
ability to standardize interfaces with systems internal and external to CMS.  
Medicaid Screening and Enrollment 
As part of its oversight role in Medicaid, CMS works closely with state Medicaid Agencies 
(SMAs) to provide regulatory guidance, technical assistance, and other support with respect to 
provider enrollment.  SMAs can comply with Medicaid screening requirements by using CMSs 
Medicare screening results for dually-enrolling providers, thus eliminating the need and burden 
associated with states re-screening such applicants.  States may use Medicare screening data, 
including site visits, payment of application fees, and FCBCs.  For Medicaid-only FFS providers, 
SMAs must at a minimum follow the same risk-based screening procedures followed by 
Medicare when enrolling Medicare providers and suppliers. 
During FY 2018, CMS continued to expand its efforts to assist states with meeting Medicaid 
screening and enrollment requirements.  These efforts include enhanced sharing of Medicare 
enrollment and screening data with states, enhancing the data compare service to help states 
identify providers for which the state is able to rely on Medicares screening, providing technical 
assistance to states through site visits, publishing additional guidance in the Medicaid Provider 
Enrollment Compendium (MPEC), continuing monthly Technical Assistance Group (TAG) 
calls, and establishing a TAG call dedicated solely to screening and enrolling Medicaid managed 
68  care network providers. 
CMS shares the Medicare provider enrollment record via the PECOS administrative interface 
and in bulk data extracts from PECOS.  Additionally CMS launched the PECOS States page in 
January 2017, and included provider enrollment information such as Medicare enrollment status, 
site visit information, fingerprint results, change of ownership information, reassignments, 
Medicare risk levels, and more.    Since May 2016, CMS has offered the data compare service 
that allows a state to rely on Medicares screening, in lieu of conducting state screening.  Using 
the data compare service, a state provides an extract of Medicaid provider enrollment data to 
CMS and then CMS returns information to the state indicating for which providers the state is 
able to rely on Medicares screening. CMS has made enhancements to this service, which 
include tailoring the type of comparison to meet a states specific needs (for example, comparing 
provider ownership information between Medicare and Medicaid).  Lastly, in FY 2018, CMS 
launched the Data Exchange (DEX) system, which is used to share data among CMS and the 
separate Medicaid programs of every state.  The new system stores all state-submitted 
terminations as well as all Medicare revocations, and HHS-OIG exclusion data, and enhances 
collaboration, improves reporting, and creates transparency through this process. 
CMS provides ongoing guidance, education, and outreach (site visits and technical assistance) to 
states on federal requirements for Medicaid enrollment and screening.  In addition, CMS 
published updates to the MPEC in FY2018, which is sub-regulatory guidance designed to assist 
states in applying certain regulatory requirements. The most recent update focuses on applying 
screening and enrollment requirements to the Medicaid managed care network provider 
population. 
Medical Review  
  Accuracy reviews  
CMS uses the Medical Review Accuracy Contractor (MRAC) to conduct medical reviews of 
determinations made by the MACs and Supplemental Medical Review Contractor (SMRC).  
CMS performs a number of accuracy reviews using clinicians; however, the MRAC is able to 
complete more accuracy reviews and provides additional analysis to CMS.  
  Prior Authorization  
In a final rule, CMS established an initial Master List of certain Durable Medical Equipment 
Prosthetic Orthotic Supplies (DMEPOS) that are frequently subject to unnecessary utilization 
and established a prior authorization process for these items. CMS announced the first two 
codes for two types of power wheelchairs subject to prior authorization as a condition of 
payment, which began on March 20, 2017, in four states. Prior authorization for these codes 
expanded nationally on July 17, 2017. DME MACs review requests for prior authorization 
for the noted items, communicate decisions with suppliers and physicians, and provide 
ongoing education and customer service. In FY 2018, CMS transitioned the Power Mobility 
Device demonstration into the national program. 
  Comparative Billing Reports  
Comparative Billing Reports (CBRs) allow providers the opportunity to view and compare 
their billing patterns to those of their peers.  They provide an educational opportunity for 
69  providers and allow them to have an additional tool for any self-audit efforts they undertake. 
Currently, CBRs are mailed or faxed to providers.  Since 2011, CBRs have been issued on 
topics such as physical therapy, opioids, and orthoses claims. Typically CBRs are sent to the 
5,000 highest-billing providers per topic and are selected based on contractor metrics to 
determine the outlier providers. Topics are based on GAO/OIG reports, Comprehensive Error 
Rate Testing program findings and through agency and contractor data analysis.   
Continue to Build States Capacity to Protect Medicaid 
CMS assists states in building their internal capacity to conduct program integrity activities for 
Medicaid.  CMS continues to use HCFAC program discretionary funds and other funding 
sources to develop and implement enterprise systems that support Medicaid. In particular, the 
Medicaid and CHIP Business Information Solution (MACBIS) initiative, will improve the CMS 
and states ability to gather and analyze data that will support program integrity activities.  
HCFAC funding also supports the preparation and dissemination of educational toolkits for 
states to use to enhance awareness of Medicaid fraud, waste, and abuse among providers, 
beneficiaries, managed care organizations, and others.  States participate in and receive technical 
assistance and education from CMS through; 
  Medicaid Technical Advisory Groups  
  Voluntary state assistance site visits  
  Webinars 
  Provider screening and enrollment strategies  
  Onsite focused program integrity reviews  
  Consolidation of provider audits and investigations through the five Unified Program 
Integrity Contractors 
  Desk reviews of state processes and procedures  
CMS also identifies areas of improvement and works with the states to make sure their integrity 
programs are robust. 
Health and Welfare Special Review Teams  
The Health and Welfare Special Review Teams (H&W SRT) project began in late September 
2018. The purpose of this project is to ensure that state quality monitoring methodologies are 
efficiently and effectively preventing, detecting, and remediating all instances of abuse and/or 
neglect to beneficiaries in home and community based settings including group homes, and 
assisted living programs.  The H&W SRT will develop an overall strategy for identifying, 
preventing, and addressing any systemic problems in the states implementation of and 
compliance with health & safety oversight systems within these settings. 
70  Medicaid Enterprise System 
State Medicaid agencies develop, implement, operate and maintain information technology 
systems to support their program operations.  The systems generally include eligibility and 
enrollment, managed care payment, encounter data and/or claims processing, pharmacy 
management, etc. These systems work in concert with one another and must adhere to Federal 
regulation19 and guidance, including the Medicaid Information Technology Architecture (MITA) 
framework, several standards and conditions20, and certification criteria.  Adhering to these 
mandates promotes the consistency of business and technical processes and IT platforms, as well 
as standards across the Medicaid Enterprise.   
CMS provides independent technical assistance to states for IT and policy requirements, 
including monitoring and oversight, in working with state-specific system requirements, IT 
system builds, and associated interfaces for all states and the territories.  Required technical 
artifacts are analyzed and tracked to assess state progress.  Gap analyses are done on a regular 
basis and risk registers are studied to identify opportunities to better ensure project success. As 
systems enter production operations (aka go-live), they are reviewed in-depth by CMS to 
ensure that the system functions appropriate to implement the policy requirements (e.g., for 
provider enrollment or for eligibility and enrollment, etc). Certain state systems also undergo a 
certification review conducted by CMS as an additional step in ensuring proper operation.   
Federal and state governments have invested heavily in the development and operations of 
Medicaid claims processing and information retrieval systems that engage in high volume 
transactions.  In 2016, CMS released an update to the MMIS Certification process in the form of 
MECT 2.0 to ensure a more comprehensive analysis of CMS funded state systems functionality. 
Moving forward, CMS is focused on increasing accountability and state flexibility by creating an 
outcomes based oversight model to state systems certification. This approach will focus on 
producing timely and accurate claims payment results, properly screening and enrolling 
providers, member management, and comprehensive data analytics and reporting capabilities 
including timely and accurate submissions of required federal reporting such as T-MSIS.   
Improper Payment Rate Measurement and Increased Accountability in Medicaid and CHIP 
Programs 
The Improper Payments Information Act (IPIA) of 2002, as amended by the Improper Payments 
Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and 
Recovery Improvement Act of 2012 (IPERIA), requires each agency to periodically review 
programs it administers and identify programs that may be susceptible to significant improper 
payments.  For those programs determined to be susceptible, the agency is required to estimate 
the amount of improper payments, submit those estimates to Congress, and report on actions the 
                                                 
19 Mechanized Claims Processing and Information Retrieval Systems (90/10) Final Rule 
(https://www.federalregister.gov/documents/2015/12/04/2015-30591/medicaid-program-mechanized-claims-
processing-and-information-retrieval-systems-9010) 
20 https://www.medicaid.gov/medicaid/data-and-systems/mita/index.html 
71  agency is taking to reduce improper payments.  The Medicaid program and CHIP have been 
identified as at risk for significant improper payments. CMS estimates improper payment rates in 
Medicaid and CHIP through the Payment Error Rate Measurement (PERM) program.  The 
improper payment rates are based on reviews of the FFS, managed care, and eligibility 
components of Medicaid and CHIP in the fiscal year under review.  CMS measures Medicaid 
and CHIP improper payment rates using a 17-state rotation so that each state is reviewed once 
every three years.  
In light of changes to the way states adjudicate beneficiary eligibility for Medicaid and CHIP 
under current law, in August 2013 and October 2015, CMS released guidance announcing 
temporary changes to PERM eligibility reviews.  For FYs 2015 through 2018, CMS did not 
conduct the eligibility measurement component of PERM. In place of these PERM eligibility 
reviews, CMS required all states to conduct Eligibility Review Pilots (ERP) that provide more 
targeted, detailed information on the accuracy of eligibility determinations to: provide state-by-
state programmatic assessments of the performance of new processes and systems in 
adjudicating  eligibility; identify strengths and weaknesses in operations and systems leading to 
errors; and test the effectiveness of corrections and improvements in reducing or eliminating 
those errors.  For the purpose of computing the overall national improper payment rate, the 
Medicaid and CHIP eligibility component improper payment rates were held constant at the FY 
2014 national rate of 3.11 percent and 4.22 percent, respectively.  
CMS also used the ERP to test updated PERM eligibility processes, and prepare states for the 
resumption of the PERM eligibility component measurement.  Based on result from the pilots, 
CMS published a final rule19 that updated the eligibility component measurement methodology. 
(82 FR 31158, July 5, 201721).  CMS resumed the eligibility component measurement under 
such final rule requiring states to do PERM reviews triennially and will report an updated 
national eligibility improper payment estimate in FY 2019.  The agency also set forth the 
standards for a new Medicaid Eligibility Quality Control program which provides states 
additional opportunities to review Medicaid eligibility determinations and determine areas for 
corrective actions in years that they are not required to do PERM reviews.   
In the HHS FY 2018 Agency Financial Report (AFR), CMS reported the national Medicaid 
improper payment rate that is based on measurements conducted in FYs 2016, 2017, and 
2018.  The FY 2018 national Medicaid improper payment rate was 9.79 percent, representing 
$36.25 billion in gross federal improper payments.  The FY 2018 national improper payment 
rates by component are 14.31 percent for Medicaid FFS, and 0.22 percent for Medicaid managed 
care.  As noted above, the Medicaid eligibility component improper payment rate was held 
constant at the FY 2014 reported rate of 3.11 percent.  The Medicaid improper payment rate 
decreased from 10.10 percent in FY 2017.  
Since FY 2014, the Medicaid improper payment rate has been driven by errors due to state non-
compliance with provider screening, enrollment, and National Provider Identifier (NPI) 
requirements.  The majority of improper payments have been cited on claims where a newly 
                                                 
21 82 FR 31158, July 5, 2017 
72  enrolled provider had not been appropriately screened by the state, a provider did not have the 
required NPI on the claim, or a provider was not enrolled. Although these errors remain a driver 
of the Medicaid rate, state compliance has improved, as the Medicaid FFS improper payment 
rate for these errors decreased from 9.27 percent in FY 2017 to 7.21 percent in FY 2018. 
While the screening errors described above are for newly enrolled providers, states are also 
required to screen providers upon revalidation of enrollment. States are required to revalidate the 
enrollment of all providers at least every 5 years and must have completed the revalidation 
process of all existing providers by September 25, 2016. In FY 2018, CMS measured the first 
cycle of states for compliance with requirements for provider screening at revalidation. Improper 
payments cited on claims where a provider had not been appropriately screened at revalidation is 
a new major source of error in the Medicaid improper payment rate. CMS will complete the 
measurement of all states for compliance with provider revalidation requirements in FY 2020. 
CMS also reported in the FY 2018 AFR the national CHIP improper payment rate that is based 
on measurements conducted in FYs 2016, 2017, and 2018.  The FY 2018 national CHIP 
improper payment rate was 8.57 percent, representing $1.4 billion in gross federal improper 
payments.  The national improper payment rates by component are 12.55 percent for CHIP FFS 
and 1.24 percent for CHIP managed care.  As noted above, the CHIP eligibility component 
improper payment rate is held constant at the FY 2014 reported rate of 4.22 percent.  The CHIP 
improper payment rate decreased from 8.64 percent in FY 2017.  
The majority of CHIP improper payments have been cited on claims where a newly enrolled 
provider or a provider due for revalidation had not been appropriately screened by the state or a 
provider did not have the required NPI on the claim (see above Medicaid section for further 
description of CMSs review of these errors).  State compliance with screening requirements has 
not improved for CHIP.  A higher percentage of CHIP providers are not enrolled in Medicare 
and, therefore, there are more CHIP providers where states are not able to rely on Medicares 
screening in lieu of conducting state screening.   
Medicaid 1115 Financial Oversight 
The Medicaid section 1115 demonstration is an increasingly important vehicle for state 
innovation in Medicaid and CHIP program development, expansion and financing.  Three 
quarters of states operate at least one 1115 demonstration, and there are approximately 40 active 
demonstrations representing estimated federal outlays in the amount of $288.7 million in FY 
2016.  The Medicaid portfolio of section 1115 demonstrations continues to grow in number, 
federal outlays, and policy importance and complexity.  CMS has committed additional staff and 
reorganized section 1115 demonstration work to develop and implement a more robust approach 
to monitoring and oversight of these demonstrations.   
CMS activities in FY 2018 included releasing a State Medicaid Director Letter documenting 
CMSs approach to various aspects of Medicaid 1115 budget neutrality calculations.  It includes 
recent changes in budget neutrality policy that CMS has been implementing which base project   
expenditures that are compared to estimated demonstration costs to more current and realistic 
expenditure growth assumptions.  CMS is also continuing to implement its revised 
uncompensated care pools policy which resizes the states uncompensated care (UC) pools based 
73  on data submitted by states, reflecting charity care only, on the Hospital and Hospital Health 
Care Complex Cost Report.  CMS does not provide UC funds to substitute for payment that 
could be provided by Medicaid through payment of appropriate rates In addition, CMS continues 
to build and test standard operating procedures and reporting tools to strengthen section 1115 
fiscal and program monitoring and internal controls, including a new budget neutrality workbook 
that is being rolled out to states in the Fall, and demonstration monitoring templates for states.   
CMS continues to work closely with technical assistance contractors to build performance 
measurement sets for high priority demonstrations such as for substance use disorders and 
community engagement.  CMS also works with states to include these measures in the 
demonstration design and reporting requirements, and then monitor demonstration progress 
against them. The same staff continue to support a CMS IT contractor to further advance an 
information management system introducing stronger and more reliable internal controls, and 
that is beginning to strengthen federal monitoring and analysis of performance trends across 
states and over time.  The fifth version of this system was recently released.  
Home and Community-Based Services Rate Review and Fiscal Integrity Project 
The Rate Review and Fiscal Integrity Project improves the efficiency and effectiveness of rate 
setting oversight and financial reporting for the Programs of All-inclusive Care for the Elderly 
(PACE), and Home and Community Based Services (HCBS) waiver and state plan programs. 
Project tasks include rate methodology review and analysis, assessing compliance with statute 
and regulations, data compilation and validation, and education and training for states and CMS 
staff.  Specifically this includes: 
  Ensuring that states are in compliance with the HCBS assurances as described in Section 
1915(c) of the Act  
  Analyzing states fiscal integrity systems; conducting analyses of HCBS personal care 
services requirements and tracking and trending states protections against waste, fraud, 
and abuse  
  Providing education and training related to financial accountability, rate development, 
and pre and post payment review methods  
  Conducting environmental scans of states incident management systems to identify 
methods to detect unnecessary and/or recurrent hospitalizations and methods for 
monitoring the health and safety of Medicaid participants  
As of September 6, 2018, 181 reviews of HCBS waivers for 41 states were completed in FY 
2018 and reports with findings pertaining to the waivers fiscal and quality components were 
compiled for each. Twenty PACE reviews spanning 17 states and a pilot survey of states 
incident management systems were also completed during this time. Findings from these reviews 
are aggregated in an annual report each year which helps inform technical assistance activities 
and guide program improvements. Since 2016, 21 presentations have been completed and made 
available to state staff via technical assistance calls and web posting. They covered topics such as 
fiscal protections in personal care services, preventing unallowable costs in HCBS programs, 
74  financial accountability of HCBS, rate sufficiency, and HCBS rate development.  
Extend Work in Medicare Parts C and D 
CMS is committed to expanding program integrity activities in capitated, managed care 
programs in Medicare.  For example, CMS has strengthened oversight of Medicare Part C and 
Part D plan sponsors by conducting audits that detect whether plans are delivering the 
appropriate health care services and medications for which they are being paid. 
National Benefit Integrity Medicare Drug Integrity Contractor (NBI MEDIC) 
The NBI MEDIC has national jurisdiction related to Part C and Part D benefits and is responsible 
for processing and tracking all Part C and Part D complaints, requests for information, and 
referrals to law enforcement, and conducting proactive data analysis and investigations. 
In the first nine months of FY 2018, NBI MEDIC Part C referrals resulted in sentences ordering 
forfeitures of $2.1 million, while Part D referrals resulted in sentences ordering restitution of 
$10.0 million according to FY 2018 notifications from law enforcement.  Through data analysis 
and investigative case development, the NBI MEDIC continued in FY 2018 to assist the HHS-
OIG and DOJ in achieving arrests, indictments, and convictions.  As a result of the NBI 
MEDICs data analysis projects including Part D plan sponsor self-audits, HHS recovered $3.1 
million in the first nine months of FY 2018 from Part D sponsors.   
Medicare Parts C and D Marketing Oversight   
Each year CMS- analyzes Annual Notice of Change (ANOC) and Evidence of Coverage (EOC) 
documents and takes compliance action against Part C, Part D Prescription Drug Plans (PDPs), 
Section 1876 Cost Plans, and Medicare-Medicaid Plans (MMPs) that fail to send timely and 
accurate ANOC or EOC documents to Medicare enrollees.  Both documents provide Medicare 
enrollees with vital information that can impact their ability to make informed choices 
concerning their Medicare health care and prescription drug options.   
In FY 2018, CMS issued a total of 35 notices of non-compliance (NONCs) to 27 parent 
organizations as part of a timeliness review.  Twenty NONCs were issued to plans that failed to 
enter dates their ANOCs or EOCs were mailed, nine NONCs were issued for incorrect coding of 
ANOC or EOC materials, and six were issued for failing to send timely ANOCs or EOCs to 
enrollees.    
There were a total of 13 NONCs issued to 13 parent organizations during the accuracy review. 
The NONCs were based on substantive inaccuracies (e.g., benefits, cost-sharing) contained in 
ANOC or EOC documents issued to Medicare enrollees.       
Program Audit  
CMS conducts program audits of Parts C and D plan sponsors to evaluate their delivery of health 
care services and medications to beneficiaries.  In order to conduct a comprehensive audit of a 
75  sponsors operation and maximize CMSs resources, program audits in 2018, as well as in prior 
years, occur at the parent organization level.  
Sponsors have all program areas audited when possible, unless a protocol was not applicable to 
their operation. Sponsors which have deficiencies cited in their audit report are required to 
correct all deficiencies and undergo validation to ensure issues have been corrected before the 
program audit can be closed. 
In general, program audits give CMS reasonable assurance that sponsors deliver benefits in 
accordance with the terms of their contract and plan benefit package.  However, CMS also has 
the authority to take enforcement actions, up to and including termination, if warranted, for 
findings that involve direct beneficiary harm or the potential to result in such harm. 
CMS has greatly increased the level of transparency with respect to audit materials, the 
performance of audits, and the results of those audits, including any enforcement actions that 
may result.  CMS believes that program audits and consequences of possible enforcement actions 
are continuing to drive improvements in the industry and are increasing sponsors compliance 
with core program functions in Medicare Parts C and D.   .    
Compliance and Enforcement 
CMS has a number of tools, including the imposition of administrative enforcement actions, to 
encourage program compliance. These actions include: 
  Civil money penalties (CMPs) 
  Intermediate sanctions (i.e., suspension of marketing, enrollment, payment) 
  CMS initiated contract terminations 
CMS has the authority to take enforcement or contract termination actions against a Part C or 
Part D plan sponsor for program violations, including:  
  Substantially failing to comply with program and/or contract requirements  
  Performance under a contract with CMS in a manner that is inconsistent with the efficient 
and effective administration of the Medicare Part C and Part D program requirements 
  Failure to substantially meet the applicable conditions of the Medicare Part C and D 
program 
Part C Benefits Review Activities 
Each year, CMS requires Part C organizations to submit bids and plan benefit packages detailing 
how their Part C plans will provide coverage to beneficiaries for the following year.  More than 
4,800 Part C plans submitted plan benefit packages on June 4, 2018 and project to cover more 
than 22.0 million beneficiaries in contract year 2019.  Bid and plan benefit submissions are 
reviewed to ensure they do not discriminate against beneficiaries and comply with CMS 
76  regulations.  Plan requirements are established and communicated annually and the following 
reviews are performed: 
  Low Enrollment Plans Each year, CMS evaluates existing Part C plans that have low 
total enrollment to make sure these plans are sustainable over time and protect 
beneficiaries from selecting a potentially unsustainable plan. 
  Total Beneficiary Cost (TBC) Evaluate increases in beneficiary cost sharing or 
decreases in plan benefits from one year to the next.  This evaluation makes sure 
beneficiaries receive value in their benefit package selection and protects them from large 
increases in out of pocket costs. 
  Maximum Out of Pocket Costs (MOOP)This review examines the maximum out-of-
pocket costs for enrollees in Part C and protects beneficiaries from very high out of 
pocket medical costs. 
  Service Category Cost-Sharing Standards Each year, CMS evaluates the cost-sharing 
plans include in their bids and plan benefit packages to ensure the plans do not exceed 
established limits and are not discriminatory.   
  Actuarial Equivalence CMS also reviews bids to make certain the estimated cost 
sharing presented in the bid is actuarially equivalent to the cost-sharing levels under FFS.  
CMS currently examines four categories for actuarial equivalence and this review helps 
guard against plans imposing discriminatory cost-sharing on beneficiaries. 
  Supplemental Benefits There are several reviews conducted in this area, including a 
review of supplemental benefits that help make sure that any optional supplemental 
benefits offered are of reasonable value, as well as a review to make certain the benefits 
are offered in a non-discriminatory fashion. 
All of these reviews are carefully conducted by CMS to make certain that plans make all 
necessary changes to their bids and plan benefit packages.  These reviews are conducted between 
early June and August and involve communications with Part C organizations to correct issues 
and resubmit their bids and plan benefit packages as necessary.  Following bid and plan benefit 
approval, Part C organizations must complete the contracting process with CMS and may market 
to beneficiaries beginning October 1st of each year.  Part C benefits requirements and review 
processes are intended to protect beneficiaries from discrimination and to make sure that Part C 
plans provide value to enrollees. 
Part C Encounter Data Processing System Contract 
In the FY 2009 inpatient prospective payment system (IPPS) final rule, CMS revised regulations 
to require Part C organizations to submit encounter data for each item and service provided to 
Part C plan enrollees.  Consistent with such regulations, CMS requires Part C organizations to 
submit encounter data for dates of service beginning January 3, 2012.  Part C organizations are 
required to submit data for all institutional, professional, and DME services provided to Part C 
plan enrollees on or after that date. CMS established and maintains the Encounter Data System 
77  (EDS) to collect and process encounter data.  To date, the EDS has collected over 3.8 billion 
encounter data records (EDRs).   
The encounter data detail each item and service provided to enrollees of Part C 
organizations.  These records are comparable in format and detail to claims submitted to the 
MACs by FFS providers.  The encounter data collected by Encounter Data Processing System 
(EDPS) will allow CMS to make more accurate payments reflecting the patterns of care and the 
predicted costs of diseases for Part C enrollees CMS is also able to use the information to 
evaluate service utilization, assess quality of care, and assess the performance of Part C 
organizations. 
Beginning in FY 2015, CMS began to use encounter data as an additional source of diagnoses to 
risk adjust payments to Part C organizations. In CY 2016, CMS continued the transition and 
calculated risk scores using both Risk Adjustment Processing System (RAPS) and encounter 
data, with RAPS-based risk scores weighted at 90% and encounter data-based risk scores 
weighted at 10 percent. CMS has continued transitioning the reliance on diagnoses from 
encounter data in payment. In calendar year 2019, CMS will continue to increase the use of 
encounter data for calculating risk scores with encounter data-based risk scores receiving a 
weight of 25 percent and RAPS-based risk scores a weight of 75 percent.  CMS anticipates 
ultimately using encounter data as the sole source of plan-submitted diagnosis information.   
Encounter Data Oversight and Integrity Activities 
Since complete and accurate encounter data are integral to risk adjustment payments and other 
uses of encounter data, CMS has developed an encounter data oversight and integrity plan to 
support efforts to ensure the completeness and accuracy of the Part C data that are collected by 
CMS.  This plan is aligned with direction provided by the GAO and lays out an incremental 
approach to assess and drive encounter data submission and quality over multiple years. Major 
components of the plan include: outreach, analysis, monitoring, and compliance of Part C plans   
encounter data submissions. 
Improper Payment Rate Measurement and Increased Accountability in Medicare Advantage 
(Part C) and Medicare Prescription Drug Benefit Programs (Part D) 
Each year, CMS publishes national improper payment rates for Medicare Part C and Part D in 
accordance with the IPIA, as amended by IPERA and IPERIA.  
The Part C gross improper payment estimate reported for FY 2018 (the latest year for which 
CMS has data, which is based on the 2016 payment year) was 8.10 percent or $15.55 billion.  
The Part C methodology estimates improper payments resulting from errors in beneficiary risk 
scores.  The primary component of most beneficiary risk scores is based on clinical diagnoses 
submitted by the plan.  If the diagnoses submitted to CMS are not supported by medical records, 
the risk scores will be inaccurate and result in payment errors.  The Part C payment error 
estimate is based on medical record reviews conducted under CMSs annual National Risk 
Adjustment Data Validation (RADV) process, where CMS identifies unsupported diagnoses and 
calculates corrected risk scores.   
78  In an effort to improve the Part C improper payment rate, CMS has implemented three key 
specific corrective actions described below:  
  Contract-Level Audits:  Contract-level RADV audits are CMSs primary corrective 
action to recoup overpayments.  RADV verifies, through medical record review, the 
accuracy of enrollee diagnoses submitted by Part C organizations for risk adjusted 
payment.  CMS expects that payment recovery will have a sentinel effect on the quality 
of risk adjustment data submitted by plans for payment, as contract-level RADV audits 
increase the incentive for Part C organizations to submit valid and accurate diagnosis 
information, and encourage Part C organization to self-identify, report, and return 
overpayments they have received.  Payment recovery for the pilot audits has been 
completed, totaling $13.7 million ($5.4 million was recovered in FY 2014, $5.0 million 
in FY 2013, and $3.4 million in FY 2012).  After completing the pilots, contract-level 
RADV audits of payment years 2011 through 2013 are in various stages of the audit 
process.  For example, payment year 2013 audits continued in FY 2018, and CMS will 
initiate payment year 2014 audits in FY 2019.  Furthermore, CMS expects to conduct 
recoveries for the 2011, 2012, and 2013 contract-level RADV audits in FY 2019. 
Overpayment Recoveries Related to Regulatory Provisions:  As required by the Social 
Security Act, CMS promulgated regulations to specify that MA organizations must report 
and return overpayments that they identify.  In FY 2018, MA organizations reported and 
returned approximately $64.9 million in self-reported overpayments.  CMS believes that 
this requirement will reduce improper payments by encouraging MA organizations to 
submit accurate payment information. 
  Training:  Historically, CMS has conducted fraud, waste, and abuse in-person and 
webinar training sessions for MA plans. In FY 2018 HHS conducted three in-person 
missions (one in October 2017 and two in April 2018) and a large in-person  fraud, waste 
and abuse training conference in July 2018.  
The Part D gross improper payment estimate reported for FY 2018 (based on CY 2016) the latest 
year for which CMS has data, was 1.66 percent or $1.3 billion, which represents payment error 
related to prescription drug event (PDE) data.  CMS measures the inconsistencies between the 
information reported on PDEs and the supporting documentation submitted by Part D sponsors: 
prescription record hardcopies (or medication order, as appropriate), and detailed claims 
information. Based on these reviews, each PDE in the audit sample is assigned a gross drug cost 
error, which is imputed onto the corresponding PDE records of a representative sample of 
beneficiaries The estimated error is calculated for this sample of beneficiaries and the result is 
extrapolated onto the payments of the remaining Part D beneficiaries to determine the Part D 
improper payment estimate.   
To improve the Part D error rate, CMS has implemented three key specific corrective actions 
described below:   
 
  Training:  CMS continued its national training sessions for Part D sponsors on payment 
and data submission.  For example, CMS continued to offer training sessions with 
79  detailed instructions for Part D sponsors submitting documentation to support their 
Prescription Drug Events (PDEs) as part of the improper payment estimation process.  
Historically, CMS has also conducted fraud, waste, and abuse in-person and webinar 
training sessions for Part D sponsors.  In FY 2018 HHS conducted three in-person 
missions (one in October 2017 and two in April 2018) and a large in-person  fraud, waste 
and abuse training conference in July 2018 
  Outreach:  CMS continued formal outreach to plan sponsors for invalid/incomplete 
documentation.  CMS distributed Final Findings Reports to all plan sponsors 
participating in the national payment error estimate.  This report provided feedback on 
the number of PDE records successfully validated, and, if applicable, identified PDEs 
that CMS had determined were not substantiated by supporting documentation and 
therefore found to be in error.  
  Overpayment Recoveries Related to Regulatory Provisions:  As required by the Social 
Security Act, CMS requires that Part D sponsors report and return overpayments that they 
identify.  CMS believes the overpayment statute and regulation contribute to increased 
attention paid by Part D sponsors to data accuracy.  In FY 2018, Part D sponsors reported 
and returned approximately $2.1 million in self-reported overpayments. 
Central Data Abstraction Tool (CDAT) 
CMS uses diagnosis information submitted by Medicare Advantage Organizations to risk adjust 
payments to plans. The more diagnosis information a plan submits, typically the higher their 
payments from Medicare. Each year, CMS conducts RADV audits to measure the accuracy of 
the plan-submitted diagnostic information.  As required by statue, CMS uses the results of these 
audits to estimate and recover overpayments for individual Medicare Advantage plans.  The 
Central Data Abstraction Tool is the main system that CMS uses to support the RADV audits. 
CMS Exchange Program Integrity 
Program integrity is an increasing concern in the Health Insurance Exchanges  both in the 
Federally facilitated Exchanges (FFE) and the State-Based Exchanges (SBEs).  In FY 2018, 
CMSs Exchange program integrity team performed investigations to identify areas of fraud and 
abuse in the Exchanges including a review of consumer complaints, verification of licenses for 
agents and brokers and identification of areas that appear to have a higher risk of fraud and 
abuse. Reviewing and categorizing consumer complaints allows CMS to identify health 
insurance policies that should be rescinded, determine whether administrative action can be 
taken and identify patterns and schemes to share with law enforcement. The agent and broker 
license verification is used to identify insurance agents and brokers who are enrolling consumers 
into Qualified Health Plans and confirm that they are registered with CMS to sell plans on the 
FFEs, have a valid license to sell insurance in the state which they are enrolling consumers, and 
hold a valid line of authority to sell health insurance products. The purpose of the high risk 
region analysis is to target analytics and audit activities specific to eligibility and enrollment to 
areas of the country that are significant outliers in eligibility and enrollment indicators. 
80  Provide Greater Transparency into Program Integrity Issues within Medicare and 
Medicaid 
CMS is dedicated to providing greater transparency into program integrity issues through 
education, outreach, partnership, strategic communications, and data releases. CMS is well 
positioned to work with its partners and stakeholders to share best practices and lessons learned 
in program integrity.  Increased transparency and accountability ensure program efficiency and 
effectiveness. 
Outreach and Education 
One of the goals of CMSs provider education and outreach is to reduce the Medicare and 
Medicaid improper payment rates by giving Medicare and Medicaid providers the timely and 
accurate information they need to bill correctly the first time.  The Medicare FFS claims 
processing contractors, known as MACs, educate Medicare providers and their staff about 
Medicare policies and procedures, including local coverage policies, significant changes to the 
Medicare program, and issues identified through review of provider inquiries, claim submission 
errors, medical review data, and Comprehensive Error Rate Testing program data.  The MACs 
use a variety of strategies and communication channels to offer Medicare providers and suppliers 
a broad spectrum of information about the Medicare program, including CMS-developed 
materials and contractor-developed materials. 
CMS works with providers, states, and others to protect CMS programs for the future. CMSs 
work focuses on safeguarding the programs and protecting beneficiaries from fraud, waste and 
abuse, while also working to minimize unnecessary burden. Providing education and training 
opportunities that are responsive to stakeholder needs will help protect the financial security of 
CMSs programs by reducing improper payments and curtailing emerging fraud schemes. By 
offering regular in-person and virtual events and trainings, as well as clear and concise 
information online, CMS aims to provide needed information that is responsive to the realities of 
clinical practice. 
In April 2018, CMS launched a new program integrity landing webpage, reflecting a complete 
overhaul of the previous web presence in its look, feel and content. The webpage represents a 
one-stop shop for all program integrity stakeholders to easily find the resources they need and 
learn about program integrity work that CMS does. Over the course of FY 2018, CMS also 
improved the content and delivery of several key webpages to provide concise and user-friendly 
information, including updates to the Parts C and D Recovery Audit Program, E-clinical 
template, Targeted Probe and Educate, Documentation Reduction and Simplification, and 
Reducing Provider Burden webpages. These webpages now include such enhancements as site-
specific navigation, user-friendly language, and the ability of users to interact and communicate 
with CMS. 
CMS also coordinated multiple training events about current Medicare Parts C and D fraud 
schemes, fraud prevention techniques, and anti-fraud, waste and abuse activities for Medicare 
Advantage Organizations and Prescription Drug Plans. These sessions integrated group 
discussions, information-sharing exercises, presentations and panel discussions that focused on 
the latest fraud, waste and abuse issues for these plans.  
81  To increase transparency and ensure providers, states, beneficiaries and others understand what 
is happening and why, a core focus for CMS in 2018 was to communicate agency priorities more 
effectively using infographics, data visualization, and information design. CMS developed 
several pieces including an Opioid Roadmap outlining efforts to address this issue of national 
concern; a Medicare Beneficiaries at a Glance Infographic (to learn more: 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Beneficiary-
Snapshot/Bene_Snapshot.html) ,  which provides a visual summary of statistics on Medicare 
beneficiaries, including the types of coverage they have, the services they use, and their 
satisfaction with the program; a Targeted Probe & Educate process flow visual to explain how 
the program works; and Data Exchange System (DEX) collateral to summarize user roles and 
highlight new features of the system. These resources are integrated into various communication 
channels and used to communicate complex ideas in ways that are easy to digest for 
stakeholders, including providers, states and the general public. In an effort to reduce opioid 
misuse, CMS also mailed 8,000 Opioid Safety Commitment posters to select providers to help 
patients understand the physicians commitment to their pain management needs and the 
practices patient safety principles. 
Healthcare Fraud Prevention Partnership (HFPP) 
In July 2012, the Secretary of HHS and the U.S. Attorney General announced a ground-breaking 
partnership to fight fraud, waste, and abuse across the health care system.  The HFPP is a 
voluntary, public-private partnership consisting of the Federal Government, state agencies, law 
enforcement, private health insurance plans, and health care anti-fraud associations.  The overall 
mission of the HFPP is to position itself as a leading body for the health care industry to reduce 
fraud, waste, and abuse by:   
  Providing an unparalleled cross-payer data source, representing the full spectrum of the 
health care industry, to enable the performance of sophisticated data analytics and 
information-sharing for the benefit of all partners 
  Achieving meaningful participation by partners and establishing strategic collaborations 
with diverse stakeholders 
  Leveraging Partnership resources and relationships to generate real-time, comprehensive 
approaches that materially impact efforts to reduce health care fraud, waste, and abuse 
In FY 2018, the HFPP reached a total membership level of 112 partner organizations, comprised 
of 9 federal agencies, 12 associations, 61 private payers, and 30 state and local partners.  
The HFPP uses a diverse variety of approaches to identify vulnerabilities in Partner data. These 
methods include standard searches to detect anomalies that may implicate the existence of fraud, 
waste, and abuse; scanning of incoming claims information against existing data sets, such as 
lists of deactivated providers; creation of reference files that list providers that may be suspect 
based on known risks; and creation of informational content to support stakeholders in 
addressing vulnerabilities (e.g., white papers). The HFPP has also expanded its study 
methodology to collect frequently updated data, including personally identifiable information 
(PII) and protected health information (PHI). The HFPP is currently using professional claims 
82  and is planning to expand to collect institutional, pharmacy, and dental claims in the future.  
Over 10 billion professional claim lines were submitted by partners in FY 2018 for the purpose 
of conducting cross-payer analyses, and by the end of FY 2018, the HFPP has commenced or 
completed 18 studies since program inception. 
Examples of studies initiated in FY 2018 include the identification of: 
  Potentially problematic sleep study providers 
  Referring providers with no prior relationship treating that patient 
  Providers with deactivated National Provider Identifiers (NPIs) that continue to 
submit claims for payment  
  Providers that perform more services during a 24-hour period or during off hours (i.e., 
weekends and holidays) than would be expected  
The HFPP also continued its efforts to foster collaboration among partners in FY 2018 by 
hosting four in-person information-sharing sessions and an Annual Executive Board meeting. 
These meetings were used to share fraud schemes and provider alerts, provide updates on law 
enforcement activities, and strategize on how to broaden the HFPPs impact in the private and 
public sectors. Additionally, in May 2018, the HFPP released a White Paper entitled "Examining 
Clinical Laboratory Services: A Review by the Healthcare Fraud Prevention Partnership The 
White Paper summarizes common issues and challenges associated with clinical laboratory 
services fraud and abuse  
State Engagement to Address Opioid Overprescribing and Misuse 
A critical component of addressing the opioid crisis is to identify and mitigate abusive 
prescribing practices and overutilization of prescription opioids. In an effort to combat the opioid 
epidemic, CMS, other federal agencies, and states are collaborating to review and improve; state 
delivery system reform, treatment programs, and policy. This project is in its infancy and still 
being fully developed. As of September 2018 New Hampshire has collaborated with CMS in an 
effort to lead to the way to best practices in analyzing and identifying potential data sources, 
trends, and determining best course of actions for interventions. This pilot project will give CMS 
a deeper understanding of state data, the various projects implemented, and the lessons learned 
that can be adapted by other states to bolster their efforts to address program integrity concerns 
in the opioids crisis.   
Open Payments  
Open Payments is a statutorily required-national transparency program designed to provide the 
public with information regarding the financial relationships between applicable manufacturers 
and group purchasing organizations (GPOs), collectively referred to as reporting entities and 
physicians and teaching hospitals.  Open Payments data includes payments and other transfers of 
value (such as gifts, honoraria, consulting fees, research grants, and travel reimbursements) that 
83  drug or device companies provide to physicians and teaching hospitals, as well as the ownership 
and investment interests held by physicians or their immediate family members in 
these companies.  
HHS is required to collect and display this information, which is self-reported annually by 
reporting entities, on the public website public website.  The public can search, download, and 
evaluate the reported data.  
In FY 2018, CMS published information regarding $8.4 billion in payments and ownership and 
investment interests that were made from applicable manufactures and GPOs to physicians and 
teaching hospitals.  This amount is comprised of 11.5 million total records attributable to 
628,214 physicians and 1,158 teaching hospitals.  Payments in the three major reporting 
categories included: 
  $2.8 billion in general (i.e., non-research related) payments 
  $4.7 billion in research payments 
  $927 million of ownership or investment interests held by physicians or their immediate 
family members 
Since the programs inception in in 2013, CMS has published over 53 million records, 
accounting for $33.4 billion in payments and ownership and investment interests.   
Administration for Community Living 
The mission of the Senior Medicare Patrol (SMP) program is to empower and assist Medicare 
beneficiaries, their families, and caregivers to prevent, detect, and report health care fraud, 
errors, and abuse through outreach, counseling, and education.  In FY 2018, HHS allocated   
$18 million in HCFAC appropriations, plus an additional $142,317 in carryover funding from 
FY 2017 to the Administration for Community Living (ACL) to support SMP program 
infrastructure and provide grants to SMPs in 54 states and territories.  
Until FY 2016, ACL received funding from a separate Congressional appropriation (the Older 
Americans Act) to support SMP grants.  However, the Consolidated Appropriations Act of 2016 
required the SMP program to be fully funded by CMS discretionary HCFAC appropriations 
beginning in FY 2016.  This language was modified in FY 2018 to require that the program be 
funded at no less than $17,621,000, still from CMS discretionary HCFAC appropriations.  In   
FY 2018, the Secretary allocated $18 million from these appropriations to the SMP program.    
SMP Project Activities and Outcomes 
ACL uses the majority of its HCFAC allocation to fund SMP projects in every state, the District 
of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands.  During FY 2018, ACL held a 
new SMP grant competition and awarded $15.57 million in funding to 54 SMPs nationwide, 
including eight new SMP grantees. Each SMP grantee received a standard, base amount of 
84  funding to support the operation of their project, as well as an additional, variable amount of 
funding based on the number of Medicare beneficiaries residing in the state and the rural areas of 
the state. SMP projects will use this funding to educate and empower Medicare beneficiaries to 
prevent, detect, and report Medicare fraud, errors, and abuse.   
New Medicare Card Initiative  
During FY 2018, ACL and SMPs partnered with CMS to identify scams and potential fraud 
trends related to the new Medicare cards CMS began issuing to all beneficiaries in April 2018. 
Over the past year, thousands of people have come to SMPs with questions about the new 
Medicare cards and how to protect themselves. Between October 1, 2017 and August 31, 2018, 
SMPs held 5,012 outreach events to educate more than 427,000 people about the new Medicare 
cards and related scams. SMPs also individually counseled 44,000 people about their specific 
questions and concerns related to the new cards. 
Annual SMP OIG Report  
Each year, the HHS Office of the Inspector General (HHS-OIG) completes an annual 
performance report on the SMP projects.  In CY 2017, the SMP projects had 6,130 active team 
members (including volunteers, staff, and partners) who contributed more than 433,728 hours of 
work in support of the SMP program.  These team members conducted 26,429 group outreach 
and education events to teach beneficiaries how to prevent, detect, and report Medicare fraud, 
errors, and abuse, reaching an estimated 1.9 million people.  In addition, the projects had 
226,261 individual interactions with, or on behalf of, beneficiaries in order to help resolve 
instances of suspected fraud, errors, or abuse.  For 2017, expected Medicare recoveries 
attributable to the SMP projects totaled $2,010,475. The SMP projects also reported $211,749 in 
cost avoidance and $44,468 in savings to beneficiaries and others. Further, additional Medicare 
expected recoveries totaled $53.2 million and additional Medicaid expected recoveries totaled 
$1.8 million.  
Since SMPs inception, the program has educated over 38.4 million beneficiaries through 
387,315 group education and outreach sessions.  The primary focus of these sessions is on 
education, prevention, and teaching beneficiaries how to protect themselves and avoid fraud in 
the first place.  This is the true value of the SMP program.  However, the impact of these 
education and prevention activities is extremely difficult to quantify in dollars and cents.  As 
HHS-OIG indicated in their May 2018 report on the SMP program: 
We note that the projects may not be receiving full credit for recoveries, savings, and cost 
avoidance attributable to their work.  It is not always possible to track referrals to 
Medicare contractors or law enforcement from beneficiaries who have learned to detect 
fraud, waste, and abuse from the projects.  In addition, the projects are unable to track 
the potentially substantial savings derived from a sentinel effect whereby Medicare 
beneficiaries scrutiny of their bills reduces fraud and errors.   
Despite the factors that have limited ACLs ability to quantify the value of the SMP program in 
preventing, identifying, and reporting health care fraud, HHS-OIG has documented over $126.8 
million in savings attributable to the SMP program since its inception in 1997. Further, HHS-
85  OIG has recognized SMP contributions to other cases that have resulted in $64.2 million in 
additional expected Medicare and Medicaid recoveries.  
SMP Infrastructure and Program Support  
SMP Resource Center 
During FY 2018, ACL awarded year two of a three-year grant to the National SMP Resource 
Center.  The SMP Resource Center has provided technical assistance, support, and training to the 
SMP projects since 2003.  The goal of the Center is to provide professional expertise and 
technical support, serve as an accessible and responsive central source of information, maximize 
the effectiveness of the SMP projects in health care fraud outreach and education, and ensure a 
fully consolidated national approach to reaching Medicare beneficiaries.  The Center has also 
been instrumental in supporting ACL efforts to forge national visibility for the SMP program.   
SMP Information and Reporting System (SIRS)  
In FY 2016, ACL implemented a new SMP data reporting system (SIRS) to support the evolving 
needs of the SMP projects.  SIRS is expected to last at least 10 years and provides SMPs with 
advanced reporting features and data analytics to help them better manage their programs.  In FY 
2018, ACL worked with SMPs to prioritize and implement ongoing system improvements to 
ensure SIRS continues to meet their needs and best support their programs.   
SMP Customer Satisfaction Survey  
During FY 2018, ACL implemented the first national survey to ascertain the quality and 
effectiveness of the services provided by the SMP program. Historically, SMPs have only 
tracked output and outcome measures, such as number of SMP team members, group outreach 
and education events, individual interactions, and savings.  As a result, there is no current 
understanding of the link between the quality of the information received and the likelihood to 
avoid health care fraud, errors, and abuse. The results from the survey will help measure 
satisfaction among individuals who attend SMP group education sessions and determine how the 
program can be improved to better serve Medicare beneficiaries, their families, and caregivers.  
ACLs SMP Customer Satisfaction Survey received OMB approval in August 2017. Survey 
implementation began in early FY 2018 and will continue over a three-year period. One-third of 
the SMP projects will be surveyed during each year of the project. At the conclusion of the 
project, survey results will be available at the national level, as well as for each SMP project. 
Preliminary national results are positive and include the following findings:  
  97% of participants were satisfied with the SMP group education session they attended  
  97% of participants felt the presentation provided them with useful information  
  96% of participants would recommend the presentation to others, and  
86    92% of participants would contact the presenter for help or information  
Preliminary results also show that based on what they learned during an SMP group education 
session, participants report they will take the following actions:  
  84% of participants will hang up on anyone who calls and asks for their Medicare 
number or personal information;   
  80% of participants will report suspected Medicare fraud, errors, or abuse;  
  80% of participants will share what they learned with their family or friends;  
  76% of participants will review their Medicare Summary Notices (MSNs) or plan 
statements for possible errors or fraudulent charges; and, 
  10% of participants will take another action.  
Final survey results and findings will be available in FY 2020, at the conclusion of the three-year 
customer satisfaction survey project.    
87  Office of the General Counsel 
In FY 2018, HHS allocated the Office of the General Counsel (OGC) $7.1 million in HCFAC 
funding to support OGCs program integrity activities.  Such activities focused on litigation 
aimed at the recovery of program funds and review of CMS programs to strengthen them against 
potential fraud, waste, and abuse.  OGCs HCFAC activities in FY 2018 helped the Government 
establish over $2.2 billion in judgments, settlements, or other types of recoveries, savings, or 
receivables.     
FCA and Qui Tam Actions 
OGC supports DOJs FCA work by interpreting complex Medicare and Medicaid rules and 
policies, which assists DOJ in discerning which allegations involve program violations and helps 
focus Government resources on the matters that are most likely to result in recovery.  In addition, 
OGC provides significant litigation support by assisting DOJ in interviewing and preparing CMS 
personnel who may act as witnesses and in responding to requests for documents and 
information.   
In FY 2018, OGC worked collaboratively with DOJ and OIG on numerous FCA matters 
regarding a variety of issues, including:  provider billing for services not rendered; falsified 
statements of medical necessity; sales of unreliable point-of-care diagnostic testing devices; 
physician self-referral violations; provider upcoding; Medicare Advantage risk adjustment; 
failure to report discounted prescription drug prices; and misrepresentations under the Medicare 
Electronic Health Records Incentive Program.  OGC efforts on these and other FCA matters in 
FY 2018 helped the Federal Government recover nearly $1.98 billion.   
Civil Monetary Penalties 
CMS is responsible for administering CMP legislation that is aimed at combatting fraud, waste, 
and abuse.  OGC, in turn, advises CMS on its development and imposition of CMPs.  OGC also 
defends CMS in numerous administrative appeals and judicial litigation related to the imposition 
of CMPs.  The decisions in such cases can immediately impact the quality of care provided to 
affected beneficiaries, save program funds, and set precedents that demonstrate HHSs 
commitment to policing this area. 
OGC obtained several favorable outcomes regarding the imposition of CMPs during FY 2018.  
For example, OGC assisted CMS in obtaining a CMP recovery against a skilled nursing facility 
for its failure to educate nurses on policies regarding medication administration and pain 
management.  As a result of such failure, a beneficiary received an incorrect dose of morphine 
and was hospitalized for an opioid overdose.   
Provider/Supplier Suspensions and Enrollment Revocations or Denials 
Payment suspensions, enrollment revocations, deactivations and denials all play a critical role in 
protecting program funds.  These actions help protect the trust funds by ensuring that 
inappropriate providers and suppliers are not given or do not retain the ability to submit claims.  
OGC assists with this work by:  advising CMS on whether to suspend payment to Medicare 
88  providers and suppliers; interpreting CMS enrollment regulations; reviewing proposed 
enrollment rules, manual changes, and correspondence related to enrollment issues; and 
providing litigation support and program guidance in defense of suspensions, revocations and 
denials.  For example, in FY 2018, OGC worked with CMSs Center for Program Integrity to 
develop a coordinated strategy for defending revocations based on improper prescribing 
practices.  OGC also defended the first revocation of a physician based on a pattern or practice of 
abusive prescribing of Part D drugs.  Specifically, OGC argued that the physician at issue put 
Medicare beneficiaries at risk of harm by prescribing expensive, compounded drugs for general 
pain and wellness via telephone.   
Part C and Part D Compliance 
During FY 2018, OGC provided extensive advice to CMS on a variety of Part C and Part D-
related contract compliance issues, including identifying enforcement options against plan 
sponsors that are noncompliant or violate program rules.  OGC also continued its review of 
compliance-related correspondence that CMS issues to Part D sponsors and Part C plans, which 
include warning letters, corrective action plan letters, intermediate sanctions, CMP notices, and 
non-renewal or termination notices.   
Petitions for Remission 
OGC collaborated with federal law enforcement, including the FBI, U.S. Attorneys Offices, the 
Secret Service, U.S. Postal Service, and the U.S. Marshals Service in filing petitions for 
remission directed to recover over $20 million in assets subject either to administrative forfeiture 
by federal law enforcement or civil judicial forfeiture by DOJ.  Each petition set forth the 
background of the fraudulent scheme, the history of Medicares payments, and how the 
fraudulently induced payments could be traced to the seized assets.  During FY 2018, OGC 
petitioned these agencies to recover funds in matters in which Medicare was a victim of fraud. 
Regulatory Review and Programmatic Advice 
In FY 2018, OGC advised CMS on a variety of regulatory and program issues aimed at 
combating fraud and preventing the wrongful disbursement of program funds in the first 
instance.  For example, OGC: 
  Provided counsel to CMS on program integrity issues in the MSSP, including advice 
regarding a proposed rule, program integrity screenings for applicants to the program, 
and appeals of application denials.  
  Reviewed proposed and final rules that eliminate the enrollment requirement in Medicare 
Parts C and D and replace this requirement with a preclusion list.  The preclusion list 
includes the names of providers or prescribers that are revoked and under a reenrollment 
bar, or that could be revoked under certain circumstances.  
  Continued to counsel the CMS Innovation Center, which is testing innovative payment 
and service delivery models to reduce expenditures and preserve or enhance quality of 
care for Medicare, Medicaid, and CHIP beneficiaries.  OGC advises the Innovation 
89  Center on topics including, model design, fraud and abuse waivers, the imposition of 
corrective action plans, participant screening, and recovery of funds for such models.  
Physician Self-Referral 
In FY 2018, OGC provided extensive counsel to CMS in its ongoing implementation of the 
Medicare Physician Self-Referral Disclosure Protocol, which was created to enable Medicare 
providers to self-disclose technical violations of the Stark laws physician self-referral 
prohibition.  In addition, as discussed above, OGC continued to provide guidance to CMS and 
DOJ in navigating the complexities of the physician self-referral law in FCA cases.  These 
consultations help build stronger cases and focus investigatory efforts, leading to successful 
results for the Government.   
Medicare Secondary Payer (MSP) 
OGCs efforts to recover Medicares conditional payments that are the primary responsibility of 
other payers directly support the HCFAC statutory goal of facilitating the enforcement of all 
applicable legal remedies for program fraud and abuse.  As part of this work in FY 2018, OGC 
assisted DOJ in its efforts to protect federal Medicare and Medicaid interests in federal opioid 
lawsuits as HHS continues to find ways to abate the opioid epidemic.   
Denial of Claims and Payments 
CMS and its contractors engaged in various activities and initiatives to detect and prevent 
abusive and fraudulent billing practices.  These measures included provider and beneficiary 
education, use of claim sampling techniques, and a more rigorous scrutiny of claims with 
increased medical review.  In FY 2018, OGC played a major role in advising CMS regarding the 
development and implementation of these types of program integrity measures and defended 
CMS in litigation brought by providers and suppliers challenging these efforts.   
Bankruptcy Litigation 
OGC protects Medicare funds from waste in bankruptcy cases by asserting CMS recoupment 
rights to collect overpayments, arguing to continue suspension or termination actions against 
debtors, seeking adequate assurances from the bankruptcy court that CMS interests in the 
debtors estate will be protected, arguing for the assumption of Medicare provider agreements as 
executory contracts, and petitioning for administrative costs where appropriate.  OGC also 
handles change of ownership issues related to bankrupt Medicare providers to ensure successor 
financial liability and to protect patient health and safety.  For example, in FY 2018, OGC 
attorneys nationwide worked with CMS to help stabilize a national chain of over 100 nursing 
homes, particularly 65 facilities in Kansas, Nebraska, South Dakota, Arkansas, and Pennsylvania 
that were put into state receiverships.  This required ensuring the proper flow of funds to the 
receivers to deliver care to the thousands of residents, including the use of federal CMP funds to 
help bridge funding gaps in some states.  
90  State Medicaid Disallowances 
Upon identifying an increasing number of questionable state financing schemes over the past 
several years designed to maximize federal payments under Medicaid, CMS has taken an 
increased number of Medicaid disallowances.  Correspondingly, OGC continues to see a 
significant increase in its workload regarding proposed disallowances, requested 
reconsiderations, and defense against Medicaid disallowance appeals before the Departmental 
Appeals Board (DAB). 
As a result of OGCs advocacy, CMS has prevailed in numerous matters in FY 2018 that have 
upheld millions of dollars in disallowances.  For example, CMS recently prevailed in a $144.8 
million disallowance against Illinois for submitting to CMS inflated claims for Disproportionate 
Share Hospital (DSH) payments in excess of the applicable limits.  
In summary, OGCs efforts in FY 2018 directly supported the HCFAC programs goals.  As part 
of its program integrity work, OGC coordinated with CMS, DOJ and OIG to enforce various 
statutes and regulations applicable to health care fraud and abuse, to the benefit of the Medicare 
and Medicaid programs.   
91  Food and Drug Administration Pharmaceutical Fraud Program 
In FY 2018, $5.9 million in HCFAC funding was made available for the U.S. Food and Drug 
Administration (FDA) Pharmaceutical Fraud Program (PFP).  The PFP was instituted to 
enhance the health care fraud-related activities of FDA's Office of Criminal Investigations 
(OCI) and the Office of the General Counsel Food and Drug Division (OGC-FDD).  OCI, 
with the support of OGC-FDD, investigates criminal violations of the Federal Food, Drug, and 
Cosmetic Act (FFDCA), the Federal Anti-Tampering Act, and related Federal statutes. 
The PFP is designed to detect, prosecute, and prevent pharmaceutical, biologic, and medical 
device fraud.  The PFP gathers information from sources inside and outside FDA and focuses on 
fraudulent marketing schemes, application fraud, clinical trial fraud, and flagrant manufacturing- 
related violations concerning biologics, drugs, and medical devices.  The goal of the program is 
the early detection and prosecution of such fraudulent conduct, which furthers FDAs public 
health mission by protecting the public from potentially dangerous medical products, helping to 
reduce health care costs, in most cases before they are incurred, and deterring future violators.  
By initiating investigations of medical product fraud schemes earlier in their lifecycle, FDA is 
able to preclude potential public harm by barring medical products, which have not followed 
the legal FDA approval processes and do not meet FDA standards, from making it to market, 
thus saving valuable health care dollars from being spent.  
The PFP has identified multiple alleged medical product fraud schemes through various avenues.  
Since the inception of the PFP, OCI has opened a total of 239 criminal HCFAC investigations.  
In FY 2018, FDAs ninth fiscal year of HCFAC Program activity, OCI, through its PFP, opened 
38 criminal investigations, including investigations involving drug compounders, clinical trials, 
and foreign and domestic medical-product manufacturers.  The investigations consist of 
allegations involving: 
  Application fraud, involving individuals or companies who may have submitted false 
or fraudulent information to FDA in order to obtain an approval or clearance; or who 
did not submit the required information to legally market drugs, devices or biologics.     
  Questionable manufacturing practices of a foreign-based drug firm and drug 
compounding facilities, involving possible data integrity, misbranding, and/or product 
adulteration.   
  Clinical trial fraud, involving possible falsification of study documents and/or 
fraudulent study subject enrollments.   
  Fraudulent marketing schemes, involving the promotion of products through false or 
misleading claims. 
As noted in previous requests, the types of criminal investigations conducted through the PFP are 
typically complex investigations, such as application fraud and marketing fraud, requiring 
extensive document review.  It is not unusual for these complex fraud investigations to last for 
five years or more from initiation to conclusion.  Yet investigations under the PFP have produced 
numerous prosecutions. 
92  In October 2017, a PFP investigation resulted in the conviction of a supervisory pharmacist of a 
compounding pharmacy on 77 counts, including racketeering, racketeering conspiracy, mail 
fraud and introduction of misbranded drugs into interstate commerce with the intent to defraud 
and mislead.  The conviction resulted from a nationwide fungal meningitis outbreak that killed 
64 and caused infections in 750 patients.  In January 2018, the defendant was sentenced to 96 
months in prison and was ordered in March 2018, to forfeit $175,000 in connection with the 
conviction. In August 2018, another defendant, an unlicensed pharmacy technician, pleaded 
guilty to 10 counts of mail fraud, in connection with his employment at the same compounding 
pharmacy.  This investigation is being conducted jointly with the FBI, a Health Care Fraud Unit 
of a U.S. Attorneys Office, and other federal law enforcement agencies. In total, fourteen 
defendants were charged in the case.    
In November 2017, the former compliance director of an Indiana compounding pharmacy plead 
guilty to introducing adulterated drugs into interstate commerce and conspiracy to defraud the 
United States by obstructing the lawful functions of the FDA.  The defendants conviction 
resulted from distributing over- and under-potent drugs to hospitals and lying to FDA inspectors 
to conceal out-of-specification drug potency test results.   
In June 2018, the founder of a health care and life sciences company, and her former chief 
operating officer, were indicted on eleven counts of conspiracy and wire fraud charges in 
connection with the marketing of a laboratory testing device.  The two defendants allegedly 
defrauded doctors, patients, and potential investors, by making false claims concerning the 
companys ability to provide accurate, fast, reliable, and cheap blood tests and test results.  
The indictment alleges that the defendants misrepresentations and omissions induced hundreds 
of patients, or their medical insurance companies, to pay for blood tests and test results, causing 
inaccurate, unreliable, and improperly validated blood results to be delivered to doctors.  This 
investigation is being conducted jointly with the FBI, the U.S. Attorneys Office, and the Postal 
Inspection Service.    
Furthermore, FDA believes that various investigations already initiated under the PFP may lead 
to future judicial action that may include criminal prosecution and monetary recoveries.  These 
investigations include drug manufacturers and clinical investigators under investigation for data 
integrity and other violations which could possibly pose a risk to the publics health and safety.   
Finally, FDA continues to train its employees and conduct outreach activities to maximize the 
agencys ability to prevent and detect fraud involving medical products.  In February 2018, FDA 
conducted health care fraud and PFP training for regulatory personnel at the FDA India Office in 
New Delhi, India. During this same trip, FDA presented on its anti-fraud efforts and the PFP at 
an international conference to regulatory partners in the governments of India, Sri Lanka, and 
Nepal.  This overseas training and outreach was conducted to strengthen our international efforts 
and to expand our global reach to investigate foreign-based manufacturing firms.  In March 
2018, FDA conducted a one-day training session for newly hired criminal investigators.  This 
training covered health care fraud control and PFP-related topics.  In April 2018, FDA conducted 
a training session on health care fraud to FDA regulatory personnel attending the annual Clinical 
Bioresearch Monitoring training.  These personnel routinely conduct inspections of clinical trials 
93  to ensure the protection of research subjects and the integrity of data submitted to FDA in 
support of a marketing application.  In May 2018, FDA conducted a one-day training session for 
supervisory criminal investigators, covering health care fraud and PFP-related topics.  In July 
2018, FDA conducted a three-day training session for current FDA criminal investigators.  The 
attendees were provided background on FDAs PFP and resources available to assist in 
investigations conducted under the PFP.  Information included legal training by OGC on the 
Federal Food, Drug, Cosmetic Act. 
94  DEPARTMENT OF JUSTICE 
United States Attorneys 
In FY 2018, the United States Attorneys Offices (USAOs) were allocated $50.5 million in 
HCFAC funding for civil and criminal health care fraud enforcement efforts.  These funds 
supported attorneys, paralegals, auditors, and investigators, as well as litigation expenses for 
health care fraud investigations and cases.  The USAOs play a major role in health care fraud 
enforcement by bringing criminal and affirmative civil cases to recover funds wrongfully taken 
from the Medicare Trust Funds and other taxpayer-funded health care systems through fraud, 
waste, and abuse.  The USAOs litigate a wide variety of health care fraud matters, including 
false billings by physicians and other providers of medical services, overcharges by hospitals, 
Medicaid fraud, kickbacks to induce referrals of Medicare or Medicaid patients, fraud by 
pharmaceutical and medical device companies, home health and hospice fraud, and failure of 
care allegations against nursing home owners.  The USAOs also coordinate with CMS regarding 
the imposition of potential civil monetary penalties against a provider. 
To ensure a focused and coordinated approach to health care fraud enforcement, each USAO has 
designated criminal and civil health care fraud coordinators.  These coordinators work closely 
with outside investigative agencies and with trial attorneys in the Departments Civil and 
Criminal Divisions on health care fraud matters.  While the USAOs receive many health care 
fraud referrals directly from investigative agencies, they also receive referrals from the Civil 
Divisions Commercial Litigation Branch (Civil Fraud Section) and through the filing of qui tam 
(or whistleblower) complaints.  Qui tam cases either are handled jointly with trial attorneys in the 
Civil Fraud Section or are delegated to the USAO to handle independently.  The USAOs also 
handle most criminal and civil litigation at the federal appellate level. 
The USAOs also partner with the Departments Criminal Division on Medicare Fraud Strike 
Forces Teams which currently operate in twelve areas across the country.  Each Strike Force 
team consists of dedicated AUSAs and support personnel from the USAO, as well as from the 
Criminal Division.  Examples of successful Strike Force cases are noted earlier in this report.   
To ensure that USAO personnel are knowledgeable and up-to-date on the law and tools for 
combatting health care fraud, HCFAC funding is used to train AUSAs and trial attorneys, as well 
as paralegals, investigators, and auditors on a wide variety of health care fraud enforcement 
matters.  In FY 2018, the Office of Legal Education (OLE) offered healthcare fraud training at 
the National Advocacy Center which was attended by approximately 60 Assistant United States 
Attorneys and which provided training on a variety of topics related to health care fraud.  In 
addition, OLE offered training on Affirmative Civil Enforcement at the National Advocacy 
Center; this course was attended by approximately 60 United States Attorneys and provided 
training on a variety of topics, including topics related to civil healthcare enforcement.  The 
Criminal Division Fraud Section also held its annual 2018 National Health Care Fraud Training 
Conference that was attended by 120 Assistant United States Attorneys representing almost 61 
districts.  In addition, the Executive Office for United States Attorneys (EOUSA) presented 
multiple webinars during FY 2018 focusing on health care fraud issues.  Many AUSAs, analysts, 
95  auditors, investigators, and paralegals participated in other federal, state, and private health care 
fraud seminars.   
Criminal Prosecutions22 
In FY 2018, the USAOs opened 1,139 new criminal health care fraud investigations and filed 
criminal charges in 572 cases involving 872 defendants.  During that same time period, 497 
defendants were convicted of health care fraud-related crimes.    
Civil Matters and Cases23 
In FY 2018, the USAOs opened 918 new civil health care fraud investigations and had 1,203 
civil health care fraud matters pending at the end of the fiscal year. 
Civil Division 
In FY 2018, the Civil Division received approximately $36.3 million in FY 2018 HCFAC 
funding to support the health care fraud activities of the Commercial Litigation Branchs Fraud 
Section and the Consumer Protection Branch.  This amount also included funding to support the 
Department of Justices Elder Justice Initiative.   
The Commercial Litigation Branchs Fraud Section 
The Civil Divisions Commercial Litigation Branch (Fraud Section) investigates complex health 
care fraud allegations and files suit under the civil FCA to recover money on behalf of defrauded 
federal health care programs including Medicare, Medicaid, TRICARE, the Department of 
Veterans Affairs (VA), and the Federal Employee Health Benefits Program (FEHBP).  The 
Fraud Section works closely with the United States Attorneys Offices and often teams with the 
Consumer Protection Branch, HHS-OIG, state Medicaid Fraud Control Units and other law 
enforcement agencies to pursue allegations of health care fraud.   
The Fraud Section investigates and resolves matters involving a wide array of health care 
providers and suppliers.  Matters involving pharmaceutical and device manufacturers and 
hospitals continued to constitute some of the most significant matters pursued by the Fraud 
Section this past year.  First and foremost, the Fraud Section takes seriously matters which raise 
the potential for patient harm, such as the AmeriSourceBergen matter, which resolved allegations 
arising from the operation of a facility that improperly repackaged oncology-supportive 
injectable drugs into pre-filled syringes and improperly distributed those syringes to physicians 
treating vulnerable cancer patients.  Other cases involved allegations of device manufacturers 
                                                 
22 FY 2018 numbers are actual data through the end of September 2018. This data includes records classified either 
with the primary or tertiary 03G  Health Care Fraud program code.   
23 FY 2018 numbers are actual data through the end of September 2018.  This data includes those records classified 
under with the FRHC  Health Care Fraud civil code. 
96  marketing and selling products that were deficient or based on misleading or false information 
(the Alere and AngioDynamics matters discussed earlier).   
A number of matters included allegations of hospitals, drug and device manufacturers, and 
pharmacies paying kickbacks to induce referrals of patients, drugs, or devices, which may 
subvert appropriate medical decision-making, and which violate the Anti-Kickback Statute 
(AKS) (such as the United Therapeutics, Pfizer, HMA, William Beaumont Hospital, Kalispell, 
and UPMC Hamot matters discussed above).  The AKS prohibits the willful solicitation or 
payment of remuneration to induce the purchase of a good or service for which payment may be 
made under a federal health care program.  The Departments largest recovery for a violation of 
the AKS was from United Therapeutics, which allegedly used a charity as a conduit to pay 
kickbacks to induce prescriptions for its drugs.  The Department also recovered hundreds of 
millions of dollars from hospitals and health systems for allegedly paying unlawful remuneration 
to clinics and physician practice groups.   
The Fraud Section has also continued to pursue matters in which providers bill federal health 
care programs for medically unnecessary services or services not rendered as billed.  The 
Department resolved claims against several hospital chains for allegations that they billed for 
excessive and unnecessary inpatient hospital services instead of less costly outpatient or 
observation services (such as the HMA, Prime, EmCare, and Banner Health matters discussed 
above).  Other matters involved allegations that providers, including hospices, skilled nursing 
facilities, and pediatric dental providers, billed for services that the patients did not need (such as 
the Vitas, Kool Smiles, and SignatureHealth matters discussed earlier).  Other cases involved 
allegations that providers such as durable medical equipment companies and pharmacies billed 
federal health care programs for services not rendered (the Rotech and DaVita Rx matters) or for 
higher and more expensive levels of medical service than were actually performed.  The Section 
has also committed significant resources to litigating claims against a number of nursing homes 
and health care providers relating to rehabilitation therapy administered to elderly residents who 
did not require or could not benefit from such therapy.   
The Fraud Section also has successfully sought to hold individuals responsible for defrauding 
federal health care programs.  A trial in Columbia, South Carolina, resulted in a judgment of 
more than $114 million against three individuals involved in a kickback scheme pertaining to 
blood laboratory testing (the HDL/Singulex matter discussed above).  Another trial in St. Louis, 
Missouri, resulted in a judgment of more than $5.4 million against two individuals and their 
respective companies for violating the FCA through a kickback scheme (the DS 
Medical/Midwest Neurosurgeons matter discussed earlier).  Additionally, a number of corporate 
settlements required individuals, particularly senior executives, to pay a portion of the settlement 
amount (such as the Prime and Paramedics Plus matters discussed above). 
As the Fraud Section is litigating an increasing number of FCA cases, including the cases 
described above, to obtain an appropriate resolution, the Fraud Section is devoting additional 
resources to ensure that these complex cases are presented to the court in a polished and efficient 
manner.  As courts have moved toward the use of technology in the courtroom, the Fraud 
Section, like other litigating parties, must retain litigation consultants who specialize in 
courtroom presentation.    
97  Because the Fraud Section receives every FCA complaint filed by whistleblowers (otherwise 
known as relators) across the country, it has a unique vantage point over health care fraud 
trends and developments nationwide and therefore regularly handles some of the most complex 
matters and takes the lead on coordinating national investigations with its law enforcement 
partners.  Likewise, given the diversity of health care fraud cases pursued by the Fraud Section, 
it frequently provides training and guidance on the FCA and health care fraud issues to AUSAs 
and agents.  The Section works closely with the HHS Office of the Inspector General (HHS-
OIG),  including its Office of Counsel, in all settlements  of health care fraud allegations to 
ensure that the administrative remedies possessed by HHS are appropriately considered and to 
enable the negotiation of compliance terms that diminish the risk that the offending conduct will 
be repeated.  The Section also collaborates with and counsels CMS and HHS-OIG on 
interagency initiatives and proposed rules and regulations.   
Finally, the Elder Justice Initiative, which is overseen by the Civil Division, coordinates and 
supports law enforcement efforts to combat elder abuse, neglect, and financial exploitation.  The 
Initiative helps law enforcement efforts by maintaining an information bank of Elder Justice 
related materials (including briefs, opinions, indictments, plea agreements, subpoena templates); 
funding medical reviewers, auditors, and other consultants to assist DOJ attorneys and AUSAs in 
their nursing home and/or long term care facility cases; hosting quarterly teleconferences with 
DOJ attorneys and AUSAs across the country to discuss issues or developments in connection 
with our nursing home and failure of care cases; and coordinating nationwide investigations of 
skilled nursing facilities.  In addition to supporting law enforcement efforts, the Initiative 
continues to fund research projects awarded by the Office of Justice Programs, National Institute 
of Justice, to study the abuse, neglect, and exploitation of elderly individuals and residents of 
residential care facilities.   
Elder Justice Initiative members represent the Department on Interagency Working Groups such 
as the Elder Justice Coordinating Council.  The Civil Division maintains the Elder Justice 
Website (www.elderjustice.gov), a valuable resource for elder abuse victims and their families, 
state and local prosecutors, elder abuse researchers, as well as practitioners.  On March 30, 
2016, the Department of Justice announced the launch of ten regional Elder Justice Task 
Forces.  These teams bring together federal, state and local prosecutors, law enforcement, and 
agencies that provide services to the elderly, to coordinate and enhance efforts to pursue nursing 
homes that provide grossly substandard care to their residents.  The Elder Justice Task Forces are 
led by representatives from the U.S. Attorneys Offices, state Medicaid Fraud Control Units, 
state and local prosecutors offices, the Department of Health and Human Services (HHS), state 
Adult Protective Services agencies, Long-Term Care Ombudsman programs, and law 
enforcement.  The ten districts are the Northern District of California, Northern District of 
Georgia, District of Kansas, Western District of Kentucky, Northern District of Iowa, District of 
Maryland, Southern District of Ohio, Eastern District of Pennsylvania, Middle District of 
Tennessee, and the Western District of Washington.  
The Consumer Protection Branch 
The Consumer Protection Branch (CPB) enforces consumer protection laws to end dangerous 
practices that harm Americas most vulnerable populations, such as the sick and elderly.  Among 
98  its top priorities are pursuing cases against those who market unsafe pharmaceuticals, medical 
devices, and dietary supplements that endanger the health and safety of patients.  CPB works 
closely with the Commercial Litigation Branchs Fraud Section, U.S. Attorneys Offices, the 
Food and Drug Administration, and other law enforcement partners on a wide range of health 
care fraud cases, including those involving the promotion and distribution of unapproved and 
adulterated drugs and medical devices. Under the Departments regulations, the Branch is the 
primary component charged with enforcement of the Food, Drug, and Cosmetic Act in the 
federal court system.  In FY 2018, CPB investigated and resolved a number of cases involving 
harmful practices that endanger the public health, employing novel tools to prosecute 
wrongdoers who sell unsafe pharmaceuticals and medical products to the American public.  
Several examples are discussed below: 
In October 2017, a Texas grand jury returned two indictments against five Chinese citizens, two 
Chinese firms, and American companies Genabolix USA and Max Pharmatech, Inc., in 
connection with alleged sales of stimulants intended for inclusion in dietary supplements.  The 
indictments alleged that five defendants participated in a scheme to produce and sell dietary 
supplements containing hidden synthetic stimulants.  As part of the scheme, the defendants 
allegedly shipped DMHA or DMAA, controversial stimulant ingredients that major American 
dietary supplement retailers will not carry.  The indictments alleged the defendants agreed with a 
confidential government informant to either mislabel the ingredients or otherwise help to hide 
the true nature of a proposed new dietary supplement from retailers.  Three defendants have 
pleaded guilty in the case.  The remaining individual defendants are believed to be in China.   
CPB also works to prosecute the fraudulent sales of purported medical devices.  Together with 
the U.S. Attorneys Office, the Branch prosecuted three individuals who marketed and sold light-
emitting medical devices as a cure-all to consumers, primarily targeting the elderly.  The 
defendants falsely claimed the device could treat a panoply of conditions, including cancer, HIV, 
diabetes, and Lou Gehrigs disease.  The leader of the scheme continued to defraud consumers 
even after he was ordered by a federal court to stop.  The scheme caused losses of more than $16 
million, mostly from elderly consumers who each paid approximately $4,000 to $13,000.  In 
April 2018, the court sentenced the lead defendant to 12 years in prison.  The other two co-
conspirators were sentenced to 24 months and 15 months of imprisonment, respectively.   
The Branch brought numerous actions related to prescription drug manufacturers.  In January 
2018, Aegerion Pharmaceuticals, Inc., pleaded guilty to violating the FDCA relating to its 
distribution of a prescription drug, Juxtapid.  Following its guilty plea, the District Court 
sentenced Aegerion to three years of probation, to include the establishment of a $7.2 million 
restitution fund.  Juxtapid was approved to treat patients with homozygous familiar 
hypercholesterolemia (HoFH), a rare genetic disorder that causes abnormally high levels of 
LDL-C, or bad cholesterol.  As part of Juxtapids approval, FDA required a Risk Evaluation 
and Mitigation Strategy (REMS) to educate prescribers about the risks of liver toxicity and to 
restrict access to Juxtapid only to those patients with a clinical or laboratory diagnosis consistent 
with HoFH.  However, Aegerion failed to give health care providers complete and accurate 
information about HoFH, filed a misleading REMS assessment report with FDA, and distributed 
Juxtapid as a general treatment for high cholesterol without adequate directions for such 
use.  The plea was part of a global resolution that included a separate consent decree of 
99  permanent injunction to resolve civil liability under the FDCA. 
In November 2017, the compliance director of Pharmakon Pharmaceuticals, Inc., an Indiana 
outsourcing facility that made and distributed compounded drugs for hospitals around the 
country, pleaded guilty to conspiracy and FDCA charges relating to the alleged distribution of 
under- and over-potent compounded drugs.  The indictment in June 2017 alleged that the 
compliance director and Pharmakons president knew of test results showing problems with the 
drugs.  The indictment alleged that in one instance, Pharmakon distributed 2,460-percent potent 
compounded morphine sulfate, which was administered to children and caused one child to be 
rushed to treatment by helicopter.  The company president is expected to go to trial in December 
2018. 
The Branch filed a civil complaint and a motion seeking a preliminary injunction in Arkansas 
against Cantrell Drug Company and its co-owner and Chief Executive Officer, to stop the 
manufacturing and distribution of adulterated drugs.  The complaint alleged that Cantrell, a 
compounding pharmacy, distributed adulterated drugs and caused drugs to become adulterated.  
Cantrell initiated voluntary recalls of drug products in 2016 and 2017 due to a lack of sterility 
assurance.  According to the complaint, FDA inspections of the Cantrell facility documented 
evidence of insanitary conditions and significant deviations from current good manufacturing 
practice requirements, including records showing the company detected potentially dangerous 
bacteria in the air and on surfaces used for sterile processing.  The district court entered a consent 
decree of permanent injunction against the firm, which required the pharmacy to undertake 
remedial measures before it can resume drug manufacture and distribution. 
The Branch is taking action to fight the opioid epidemic.  CPB worked with the U.S. Attorneys 
Office for the Northern District of Ohio to file first-of-their-kind civil enforcement actions 
against two physicians for illegally distributing and dispensing opioids and other controlled 
substances.  The complaints alleged violations of the Controlled Substances Act.  The complaint 
against one of the doctors also alleged numerous False Claims Act violations.  The court in both 
matters granted temporary restraining orders to limit the defendants ability to distribute or 
dispense controlled substances.  The actions ultimately will seek permanent injunctive relief and 
civil money penalties. 
CPB continued to play a leading role in the Departments efforts to combat elder fraud, which 
aims to detect and deter a broad array of scams, including health-care-related frauds.  The 
Branch coordinated a major Department sweep of elder fraud cases brought across the country.  
The actions, announced at a press conference by the Attorney General in February 2018, 
included cases against more than 150 defendants who caused more than half a billion dollars of 
loss to more than one million victims.  The sweep included cases filed by the Department 
between February 2017 and February 2018, and featured a number of Consumer Protection 
Branch criminal and civil cases.  The Branch also coordinated an education and public outreach 
campaign that accompanied the sweep announcement.   
100  Criminal Division 
In FY 2018, the Criminal Division was allocated $25.3 million in HCFAC funding to support 
criminal health care fraud litigation and interagency coordination, which is carried out primarily 
by the Fraud Sections Health Care Fraud Unit and, to a lesser extent, the Organized Crime and 
Gang Section.   
The Fraud Section 
The Fraud Sections Health Care Fraud Unit (HCF Unit) employs criminal prosecutors who 
focus exclusively on investigating and prosecuting health care fraud and related offenses.  The 
HCF Units core mission is to investigate and prosecute health care fraud and illegal prescription 
opioid schemes that harm the public in two ways.  First, a significant number of the HCF Units 
charged cases and active investigations focus on harm to federal health care program 
beneficiaries, including opioid abuse and drug diversion.  Second, all of the cases investigated 
and prosecuted by the HCF Unit involve substantial losses to federal health care programs and 
the public fisc.  The HCF Unit also supports the U.S. Attorneys Office community by providing 
legal, investigative and data analytics support, guidance and training on criminal health care 
fraud matters.   
Beginning in March 2007, the Fraud Section, working with the local USAO, the FBI, HHS-OIG, 
and state and local law enforcement agencies, launched the Medicare Fraud Strike Force in 
Miami-Dade County, Florida, to investigate and prosecute individuals and entities that do not 
provide legitimate health care services but exist solely for the purpose of defrauding Medicare 
and other government health care programs.  In FY 2018, the HCF Unit provided attorney 
staffing, litigation support, and leadership and management for the Strike Force programs 
operations in  twelve regions across the United States including Miami, Orlando, and Tampa, 
Florida; Los Angeles, California; Detroit, Michigan; Houston and Dallas, Texas; Brooklyn, New 
York; Baton Rouge and New Orleans, Louisiana; Chicago, Illinois; Newark, New Jersey; and 
Philadelphia, Pennsylvania, along with a Corporate Strike Force located in Washington, D.C.  
The Newark and Philadelphia locations were added this fiscal year as part of the 
Newark/Philadelphia Regional Strike Force, announced by Assistant Attorney General Brian 
Benczkowski on August 13, 2018, as a joint effort between DOJ, HHS, FBI, and DEA, to 
combat health care fraud and the opioid epidemic in the District of New Jersey and the Eastern 
District of Pennsylvania.  As noted above, the ARPO SF was launched at the beginning of FY 
2019, with preparations beginning at the end of FY 2018.  Since the inception of the Strike Force 
program in 2007, the HCF Unit and its Strike Force partners have charged 3,800 defendants who 
have collectively billed the Medicare program approximately $15 billion.   
In FY 2018 alone, the HCF Unit achieved the following results:   
  Filed 151 indictments, criminal informations and complaints involving charges filed 
against 326 defendants who allegedly collectively billed federal health care programs 
approximately $1.8 billion;   
101    Obtained 188 guilty pleas and litigated 16 jury trials, with guilty verdicts against 
22 defendants; and  
  Sentenced 172 defendants, with an average sentence of over 58 months. 
Each year, the HCF Unit leads and coordinates the National Health Care Fraud Takedown.  On 
June 25, 2018, Attorney General Jeff Sessions and Department of Health and Human Services 
(HHS) Secretary Azar, announced the results of the FY 2018 Takedown  the single largest 
health care fraud law enforcement operation in history  led by the HCF Unit in coordination 
with 58 U.S. Attorneys Offices and 30 Medicaid Fraud Control Units (MFCUs).  This years 
Takedown resulted in charges against 601 individuals, including 165 doctors, nurses, and other 
licensed medical professionals, involving approximately $2.0 billion in false and fraudulent 
billings to Medicare, Medicaid, TRICARE, and other federal and private insurance programs.  
Of the 601 individuals charged, 162 (including 32 doctors) were charged in cases involving the 
illegal distribution of opioids.  Furthermore, to prevent further patient harm, the Drug 
Enforcement Administration (DEA) revoked the DEA registrations for prescribers or had the 
numbers surrendered for cause, and the Centers for Medicare & Medicaid Services (CMS) 
suspended a number of providers using its suspension authority as provided in the Affordable 
Care Act. 
The HCF Unit also provided legal guidance to FBI and HHS-OIG agents, health program agency 
staff, Assistant U. S. Attorneys, and other Criminal Division attorneys on criminal and 
administrative tools to combat health care fraud.  Throughout FY 2018, the HCF Units 
prosecutors met with federal prosecutors and agents across the United States to provide training, 
investigative leads based on data analysis, and related support.  The HCF Unit also provided 
advice and written materials on patient medical record confidentiality and disclosure issues, and 
coordinated referrals of possible criminal HIPAA privacy violations from the HHS Office for 
Civil Rights; monitored and coordinated DOJ responses to legislative proposals, major 
regulatory initiatives, and enforcement policy matters; reviewed and commented on health care 
provider requests to the HHS-OIG for advisory opinions and consulted with the HHS-OIG on 
draft advisory opinions; worked with CMS to improve Medicare contractors fraud detection, 
referrals to law enforcement for investigation, and case development work; and prepared and 
distributed to all USAOs and FBI field offices periodic summaries of recent and significant 
health care fraud cases.  
Each year, the HCF Unit coordinates and hosts the National Health Care Fraud Training 
Conference.  The 2018 National Health Care Fraud Training Conference was held in September 
2018 in Washington, D.C. and was attended by 360 criminal and civil prosecutors (representing 
more than 60 U.S. Attorneys Offices) and law enforcement personnel from FBI, DEA, HHS-
OIG, IRS Criminal Investigation, and Defense Criminal Investigative Service (DCIS), U.S. 
Postal Service (USPS), and the Department of Veterans Affairs - OIG.  The Conference provided 
training on investigative techniques and tools, trial skills, case studies, and persistent and 
emerging schemes in both health care fraud and opioid abuse and drug diversion. 
As part of the HCF Units efforts to lead a coordinated, national approach to combating health 
care fraud, the HCF Unit bolstered the HCF Unit Data Analytics Team in FY 2018.  This team 
102  allows the HCF Unit to better assist prosecutors in effectively and efficiently identifying and 
prosecuting individuals and entities, and to examine emerging health care fraud, opioid fraud, 
and drug diversion trends in the field.  The HCF Unit Data Analytics Team also provides U.S. 
Attorneys Offices with customized HCF data analytic training and ongoing case-specific 
investigation and prosecution assistance.  The HCF Data Analytics Team will continue to 
strengthen the HCF Units partnerships with U.S. Attorneys Offices across the country in 
combating health care fraud.   
Furthermore, the HCF Units cases are also increasingly complex, both in cases investigated and 
charged in the individual Strike Force locations and in cases handled by the Corporate Strike 
Force.  Specifically, the Corporate Strike Forces mission is to investigate and prosecute 
corporate fraud cases involving major health care providers that operate in multiple jurisdictions, 
including major regional health care providers operating in the Strike Force cities, with a focus 
on investigations and prosecutions of individuals.  The Corporate Strike Force coordinates with 
the Civil Divisions Fraud Section and Consumer Protection Branch, U.S. Attorneys Offices 
across the country, state Medicaid Fraud Control Units, the FBI, and HHS-OIG in order to 
identify, investigate, and prosecute significant corporate health care fraud cases, including the 
global resolution with Tenet Healthcare Corporation and related individual prosecutions.  In 
addition, numerous city-based Strike Force prosecutions involve sophisticated money laundering 
and financial fraud schemes involving the use of shell companies and intermediaries to conceal 
ownership interests, kickback payments, and assets.  The HCF Units expertise enables it to 
pursue these complex cases, many of which involve hundreds of millions of dollars in fraudulent 
claims to the Medicare and Medicaid program and TRICARE. 
Based on the Criminal Division, Fraud Sections prosecutions in FY 2018, the below chart sets 
forth the projected amounts the Medicare Program saved over specific amounts of time.  For 
example, had the defendants charged by the Fraud Section in FY 2018 continued defrauding the 
Medicare program at the same rate, this would have resulted in an additional $1.1 billion loss 
after 3 years, and $2.4 billion in loss after 10 years.  The Impact of Investment shows that over 
10 years, every dollar spent on the Criminal Division, Fraud Section in FY 2018, resulted in 
$109 in savings to the Medicare program.   
Time Frame  Monies Saved  Impact of Investment 
1-year  $442.7 million   $20 saved/ $1 spent 
3-year  $1.085 billion  $49.4 saved/ $1 spent 
5-year  $1.597 billion  $72.5 saved/$1 spent 
8-year  $2.151 billion  $97.7 saved/$1 spent 
10-year  $2.419 billion  $109 saved/$1 spent 
The Organized Crime and Gang Section (OCGS) 
The Criminal Divisions Organized Crime and Gang Section (OCGS) supports and conducts 
investigations and prosecutions of health care fraud and abuse targeting private sector health 
plans as well as health care fraud and abuse perpetrated by domestic and international organized 
crime groups.  With respect to private sector health care fraud, OCGS supports and conducts 
103  enforcement efforts combatting fraud and abuse directed at the 2.3 million private sector health 
plans sponsored by employers and/or labor organizations which cover some 143 million 
Americans.  OCGS also works to improve strategic coordination in the identification and 
prosecution of domestic and international organized crime groups engaged in sophisticated 
frauds posing a threat to the health care industry and provides legal advice and necessary 
approvals in the use of the Racketeer Influenced and Corrupt Organizations (RICO) statute to 
combat health care fraud and abuse. 
In FY 2018, seven OCGS attorneys were assigned to health care fraud prosecutions and 
investigations.   
In Knoxville, one OCGS attorney worked with the United States Attorneys office for the 
Eastern District of Tennessee on a pill-mill prosecution of individuals illegally operating pain 
clinics and prescribing vast quantities of opioids.  Superseding indictments returned in January 
and May 2018 charged seven individuals, including two leaders in Italy, for their roles in a 
Racketeering Influenced Corrupt Organization (RICO) conspiracy and drug trafficking 
conspiracy to distribute and dispense oxycodone, oxymorphone and morphine outside the scope 
of professional practice and not for a legitimate medical purpose and resulting in deaths.  The 
indictment also charged maintenance of drug-involved premises, distribution of oxycodone 
resulting in death, conspiracy to defraud the United States through the solicitations and receipt of 
illegal health care kickbacks and money laundering. The criminal enterprise is alleged to have 
operated clinics in Tennessee and Florida which generated revenues of over $21 million and 
prescribed in excess of 880 billion milligrams of oxycodone. In total, the partnerships between 
OCGS and the Eastern District of Tennessee has resulted in the investigation and prosecution of 
over 140 individuals.  Trial is scheduled in FY 2019.  This case is summarized above in the 
Highlights of Significant Criminal and Civil Investigations. 
In Washington, D.C., two OCGS attorneys are handling the prosecution of a former union 
official and an outside lobbyist for health care fraud conspiracy and health care fraud.  The union 
official is alleged to have arranged for the lobbyist to be fraudulently placed on the unions 
health plan even though the lobbyist was not a full-time employee of the union and therefore not 
eligible to participate in the health plan. The lobbyist thereafter obtained more than $66,000 in 
medical reimbursements to which she was not entitled from the insurance carrier for the plan.  
Trial is scheduled in FY 2019. 
Additional OCGS attorneys were engaged in investigations of health care fraud, kickbacks, 
embezzlements and other criminal abuses involving large collectively bargained health plans, 
third party administrators to private sector health plans, pharmacy benefits managers, health 
plans funded through prevailing wage government contracts, and health plans provided through  
multiple employer welfare arrangements.  
OCGS attorneys routinely provide litigation support and advice to AUSAs and criminal 
investigative agencies in the investigation and prosecution of corruption and abuse of private 
employment-based group health plans covered by the Employee Retirement Income Security Act 
(ERISA). Private sector employment-based group health plans are the leading source of health 
care coverage for individuals not covered by Medicare or Medicaid.  OCGS provides litigation 
104  support as requested at any stage of the prosecution from indictment through trial and on 
appeal.     
OCGS attorneys support investigations and prosecutions of fraud schemes by corrupt entities that 
sell unlicensed health insurance products, as well as fraud schemes by corrupt employers that 
cheat workers out of health benefits required by the prevailing wage laws and regulations.  For 
example, in August 2018, an OCGS attorney provided assistance to the investigation and 
indictment in the Eastern District of Louisiana of two individuals operating a multiple employer 
welfare arrangement.  The indictment alleged fraud and false statements in the marketing and 
sale of group health care coverage causing losses exceeding $41 million. The scheme involved 
the sale of health care coverage to employers based upon false representations that the health 
plan was funded by a loan arrangement which would greatly lower the employers and their 
contributing employees taxable income.  In fact there was no loan arrangement and no 
participant contributions.  The defendants collected more than $21 million in fees from 
employers and contributing employees.  In addition, the defendants caused at least $20 million in 
federal FICA taxes to be underpaid as well as a significant amount of personal income taxes, 
amounts for which the employer-clients and employee-participants may be individually 
responsible.  This case is summarized above in the Highlights of Significant Criminal and Civil 
Investigations. 
OCGS attorneys also provide health care fraud and abuse training and legal guidance to AUSAs 
and to criminal investigators and agents of the Department of Labors Employee Benefits 
Security Administration and Office of Inspector General, FBI and IRS.  Such training and 
guidance covers prosecutions involving abuse of private sector employee health plans subject to 
ERISA and health plans sponsored by labor organizations, as well as fraud and abuse committed 
in connection with the operation of multiple employer welfare arrangements.  OCGS is also 
responsible for drafting and reviewing criminal legislative proposals affecting employee health 
benefit plans.  Finally, OCGS provides legal guidance to prosecutors and required approvals in 
the use of the RICO statute in prosecutions of racketeering enterprises involved in the 
distribution of opioids, fentanyl, and other pharmaceuticals Medicare and Medicaid frauds, and 
private sector health care frauds.   
Civil Rights Division 
In FY 2018 the Civil Rights Division was allocated $13.933 million in HCFAC funding to 
support Civil Rights Division litigation activities related to health care fraud and abuse.  The 
Civil Rights Division pursues relief affecting public, residential, and nonresidential health care 
facilities and service systems, and conducts investigations to eliminate abuse and grossly 
substandard care in public, Medicare, and Medicaid funded long-term care facilities.  Consistent 
with the ADAs integration mandate set forth in 28 C.F.R.  35.130(d), the Division also works 
to prevent the unnecessary segregation of individuals who require health care supports and 
services.  Olmstead v. L.C., 527 U.S. 581 (1999). 
The Division plays a critical role in the HCFAC Program.  The Special Litigation Section of the 
Civil Rights Division is the sole DOJ component responsible for enforcing the Civil Rights of 
Institutionalized Persons Act, 42 U.S.C. 1997 (CRIPA).  CRIPA authorizes the investigation of 
105  conditions of confinement at state and local residential institutions, including facilities for 
persons with developmental disabilities or mental illness, and nursing facilities, and initiation of 
a civil action for injunctive relief to remedy a pattern or practice violation of the Constitution or 
federal statute.  In addition, both the Special Litigation Section and the Disability Rights Section 
have engaged in interagency coordination with the goal of combatting the misuse of Medicaid 
funding related to the unnecessary segregation of persons with disabilities.  
The Disability Rights Section of the Civil Rights Division has primary enforcement authority 
for the Americans with Disabilities Act (ADA).  Title II of the ADA authorizes the 
investigation of allegations of discrimination by public entities against individuals with 
disabilities, including discrimination in the form of unnecessarily segregating persons who 
require health care supports and services.  See Olmstead, 527 U.S. 581.  Title II also authorizes 
the initiation of civil actions to remedy discrimination in violation of the ADA.  In addition to 
violating the civil rights of individuals with disabilities, such unnecessary segregation often 
increases Medicaid costs.  
The Educational Opportunities Section of the Civil Rights Division also participates in the 
HCFAC Program to address the use of Medicaid funding for youth with disabilities who are 
unnecessarily placed in segregated education settings in violation of the ADA.  The Special 
Litigation, Educational Opportunities, and Disability Rights Sections work collaboratively with 
the USAOs and with HHS. 
FY 2018 Accomplishments  
Key litigation and enforcement accomplishments in FY 2018 by the Civil Rights Division can be 
summarized as follows: 
  Number of matters in active enforcement:  15; 
  Cumulative estimate of individuals with disabilities affected:  55,685; and 
  Number of institutional facilities affected:  2,095. 
Special Litigation Section 
In Fiscal Year 2018, the Special Litigation Section continued monitoring compliance with four    
statewide settlement agreements and began monitoring a fifth statewide agreement.  In addition 
to these agreements, which benefit thousands of people, the Section continued litigating two 
large cases involving the alleged unlawful institutionalization of, and denial of community-based 
services to, individuals with disabilities.  During FY 2018, the Sections active enforcement 
efforts affected more than 1,400 health care facilities in eight states.   
In Louisiana, the Division filed a complaint alleging that the State violates the ADA by requiring 
people with mental illness to receive services in nursing facilities when they qualify for, and 
could be served in, community-based settings.  The Division simultaneously filed a settlement 
agreement that requires the State to transition people with mental illness from nursing facilities 
to community-based care where appropriate and not opposed, enhance the community-based 
106  services necessary to support them, and divert other people with mental illness from unnecessary 
nursing facility admission.     
The Section also continued monitoring implementation of settlements in New Hampshire, 
Virginia and Georgia that are helping individuals with intellectual, developmental, and mental 
health disabilities avoid unnecessary institutionalization.   
In New Hampshire, the States implementation of the settlement has diverted hundreds of 
individuals with mental illness from costly hospital admissions through community crisis 
services; served over 800 people in permanent Supported Housing; provided approximately 
1,000 adults with Assertive Community Treatment (ACT) services at any given time; and within 
the last year, provided over 3,700 people with Supported Employment services, a Substance 
Abuse and Mental Health Services Administration (SAMHSA) evidence-based practice that 
assists individuals with disabilities to gain meaningful, competitive employment, self-
sufficiency, and independence.    
Similarly, in Georgia, the States implementation of the settlement has diverted hundreds of 
individuals with mental illness from unnecessary hospital admissions, provided permanent 
Supported Housing enabling 4,000 people to live successfully in the community, provided 
approximately 1,600 adults with ACT services, and provided over 1,200 people with Supported 
Employment services.  Under the settlement, Georgia is also serving an additional 1,700 people 
with intellectual and developmental disabilities (IDD) through Medicaid home and community-
based services to prevent their unnecessary institutionalization or return them to the community 
from institutional settings.   
In Virginia, as a result of the States implementation of the settlement, more than 4,000 people 
with IDD who qualify for Medicaid-funded community services have received them; an 
additional 12,000 people with IDD have received one-time support to assist them in continuing 
to live in the community; more than 450 people with IDD have been able to live in their own 
home; and more than 700 individuals have successfully transitioned from state-run residential 
institutions to community settings.   
In Oregon, the Section continued to monitor the 2016 Oregon Performance Plan (OPP), which 
the State developed in response to the Divisions investigation of the States mental health 
system.  As a result of the States implementation of the OPP, the State has 35 ACT teams 
serving over 1,200 individuals, 400 more than in 2016.  The State has also expanded peer-
delivered services from about 2,100 individuals to over 3,000. 
The Section continued to work toward a resolution of the Divisions investigative conclusions 
that:  1)  South Dakota fails to serve older adults and people with disabilities in the most 
integrated setting appropriate to their needs; and 2)  West Virginia fails to serve children with 
mental health conditions in the most integrated setting appropriate to their needs.  
The Section continued litigation against the State of Mississippi alleging that the State violates 
the ADA by serving thousands of persons with mental illness in State psychiatric hospitals when 
they could be served in integrated settings in the community.  Trial is expected to occur in FY 
2019.  The Section also continued litigation against the State of Texas alleging that the State 
107  violates the ADA by unnecessarily institutionalizing persons with intellectual and developmental 
disabilities in nursing facilities.  Trial in this case commenced in October 2018. 
Disability Rights Section 
In FY 2018, the Disability Rights Section monitored compliance of five settlement agreements, 
under which more than 16,100 people collectively will obtain relief; investigated whether 
another state provides services to individuals with physical disabilities in the most integrated 
setting appropriate to their needs; and continued its litigation of another case involving 
unnecessary segregation of people with disabilities. 
The Section continued to monitor the implementation of its settlement agreement with the State 
of North Carolina, under which the State is providing opportunities to individuals with mental 
illness in adult care homes to transition to less costly, integrated service settings.  Specifically, 
the State must provide integrated supported housing to 3,000 people by July 2021 and expand 
integrated employment opportunities for people with mental illness by providing supported 
employment services to 2,500 individuals by 2021.  These services will allow individuals with 
mental illness to choose to live and work in the community, while allowing the State to avoid 
costly institutional settings.  
As of June 30, 2018, 2,168 individuals had been diverted or moved from large adult care homes 
to permanent supported housing.  Eight hundred and eighty-nine individuals were diverted from 
adult care homes upon discharge from a state psychiatric hospital or upon being considered for 
admission to an adult care home, and 1,279 individuals moved out of adult care homes into the 
community.  Of the 2,168 individuals who have moved into permanent supported housing, 1,580 
(or 73 percent) continue to live and receive services in the community.  In addition, 5,279 
individuals were receiving ACT services and 1,805 individuals in the agreements target 
population had received supported employment services.  
The Section also continued to monitor its settlement agreements with the State of Rhode Island 
and the City of Providence, addressing the unnecessary segregation of individuals with 
disabilities in sheltered workshop and facility-based day programs.  Under the agreements, the 
State will provide Supported Employment placements to roughly 2,600 individuals with IDD by 
2024, and roughly 3,500 individuals will benefit from changes to the States employment and 
day service systems.  The State and City of Providence have made significant progress, including 
meeting or exceeding two of three upcoming Supported Employment placement targets ahead of 
schedule.  Thus far, 786 individuals have obtained competitive, integrated employment over the 
course of these agreements. 
The Section, along with the U.S. Attorneys Office for the Eastern District of New York, 
continued monitoring the second amended settlement agreement with the State of New York and 
private plaintiffs regarding New Yorks mental health service system.  The agreement benefits at 
least 2,500 people and remedies discrimination by the State in the administration of its mental 
health service system.  Pursuant to the agreement, individuals with serious mental illness who 
reside in 22 large institutional settings known as adult homes in New York City are provided the 
opportunity to receive services in the most integrated setting appropriate to their needs consistent 
with the ADA and Olmstead.  Under the agreement, these individuals can choose to live and 
108  receive services in the community, thus enabling them to live, work, and participate fully in 
community life.  To date, more than 700 former adult home residents are living and receiving 
services in the community, and more than 2,100 additional adult home residents have expressed 
interest in doing so.  On March 12, 2018, the parties asked the Court to approve a proposed 
supplement to the second amended settlement agreement.  The Court held a fairness hearing 
regarding the proposed supplement on June 18, 2018, and granted final approval of the 
supplement on September 6, 2018.   
The Section is working with class plaintiffs to monitor a settlement agreement with the State of 
Oregon.  Pursuant to the settlement agreement, the State is decreasing its reliance on segregated 
employment settings and increasing supported employment services to help individuals with 
IDD obtain competitive integrated employment.  The State committed to provide supported 
employment services and related employment services so that by June 30, 2022, 1,115 working-
age individuals receiving sheltered workshop services would newly obtain competitive integrated 
employment.  The State also agreed that by July 1, 2022, it would provide employment services 
to at least 4,900 youths aged 14 to 24, and Individual Plans for Employment to at least half of 
those youths.  The State has reported that as of March 2018, it had reduced the census of 
segregated sheltered workshop settings to 664 and the total number of hours worked in such 
settings to 34,155.  The State has also reported that through the end of June 2018, it had provided 
supported employment services and related employment services so that at least 598 individuals 
receiving sheltered workshop services have newly obtained competitive integrated employment, 
3,102 transition-aged youths have received at least one new employment service, and 2,702 of 
those youths received an Individual Plan for Employment.   
The Section continued to litigate United States v. Florida (S.D. Fla. 2013), a case in which the 
United States alleges, among other things, that the State of Florida administers its Medicaid 
service system for children with significant medical needs in violation of Title II of the ADA by 
unnecessarily segregating them in nursing facilities, when they could, and want to, be served at 
home or in other community-based settings.  On August 7, 2017, the United States filed a notice 
of appeal, appealing to the U.S. Court of Appeals for the Eleventh Circuit the Final Order of 
Dismissal as to the United States, entered on September 20, 2016, and the final order of 
dismissal of all other claims and parties, entered June 9, 2017.  The appeal was fully briefed on 
March 1, 2018, and oral argument occurred on October 3, 2018. 
Educational Opportunities Section 
The Educational Opportunities Section (EOS) has participated in the HCFAC Program for the 
past four years.  The Section has carefully analyzed the legal issues related to unnecessary 
segregation in the context of K-12 schools.  The Sections pending litigation against the State of 
Georgia, alleging that the State is violating Title II of the ADA regarding its use of segregated 
educational services for approximately 5,000 Georgia students with emotional and behavioral 
disabilities, has been stayed pending resolution of United States v. Florida, noted above. 
109  Office of Inspector General 
In FY 2018, the Office of the Inspector General (OIG) was allocated $0.8 million in HCFAC 
funding to address health care fraud as it directly impacts DOJ operations.  The DOJ spends over 
$1 billion a year to provide health care to inmates of the Federal Bureau of Prisons and the U.S. 
Marshals Service and over $115 million a year in annual workers compensation payments 
related to disabled DOJ employees and informants.  To date, the OIG has hired one special agent 
and two analysts to assist in identifying and investigating health care fraud.  This has resulted in 
the initiation of nine cases for the Investigations Division and also a Procedural Reform 
Recommendation to the Bureau of Prisons that they move toward electronic billing for health 
care data at all their facilities.  
110  APPENDIX 
Federal Bureau of Investigation 
In FY 2018, the FBI was allocated $134.5 million in funding from HIPAA to support the 
facilitation, coordination and accomplishment of the goals of the HCFAC Program.  This yearly 
appropriation was used to support 814 positions (487 Agent, 327 Support). 
In FY 2018, the FBI initiated 781 new health care fraud investigations and had 2,247 pending 
investigations.  Investigative efforts produced 553 criminal health care fraud convictions and 880 
indictments and informations.  In addition, investigative efforts resulted in over 812 operational 
disruptions of criminal fraud organizations and the dismantlement of the criminal hierarchy of 
more than 207 health care fraud criminal enterprises.  
The FBI is the primary investigative agency involved in the fight against health care fraud that 
has jurisdiction over both federal and private insurance programs.  Health care fraud 
investigations are considered a high priority within the FBIs Complex Financial Crime Program.  
Each of the 56 FBI field offices has personnel assigned specifically to investigate health care 
fraud matters.  
The FBI seeks to approach the health care fraud crime problem in a threat-based and 
intelligence-driven manner.  The approach employs the prioritization of enforcement efforts, at 
both the national and field office levels, to ensure limited resources are focused on the most 
significant entities committing health care fraud and abuse.  As part of the process, the FBI 
gathers relevant data and information to understand the impact of the crime problem and to 
identify intelligence gaps, or areas which require additional research and analysis.  The need 
and availability of resources to support mitigation efforts, including enforcement and intelligence 
related activities, are also factored into the analysis.  The process is constantly on-going and 
requires collaboration not only among FBI components, but also with its public and private 
partners.  
As part of our collaboration efforts, the FBI maintains investigative and intelligence sharing 
partnerships with government agencies such as other DOJ components, HHS-OIG, state 
Medicaid Fraud Control Units, and other enforcement and regulatory agencies. The FBI conducts 
significant information sharing and coordination efforts with private insurance partners, such as 
the National Health Care Anti-Fraud Association, the National Insurance Crime Bureau, and 
private insurance investigative units.  The FBI is also actively involved in the Healthcare Fraud 
Prevention Partnership, an effort to exchange facts and information between the public and 
private sectors in order to reduce the prevalence of health care fraud.  
As a result of the collaboration and review process, the FBI has designated criminal enterprises 
and other crime groups, corporate-level fraud and abuse, and public safety issues  to include the 
rising prescription drug abuse epidemic, as the priority health care fraud threat areas of focus.  
Each field office conducts a similar analysis to determine their areas of focus and the actions 
they will take to mitigate the associated threats. 
111  FBI field offices throughout the U.S. address the health care fraud threat through joint 
investigative efforts; intelligence collection, sharing, and analysis; and the utilization of 
advanced and sophisticated investigative techniques.  FBI field offices participate in health care 
fraud task forces and/or working groups with partners including local USAOs, HHS-OIG, DEA, 
IRS, FDA, other federal, state, and local law enforcement agencies, and private insurance 
personnel.  Based on information sharing and coordination, additional cases are vetted and 
identified for investigation.  These activities seek to identify and pursue investigations against 
the most egregious offenders involved in health care fraud and abuse.  
The FBIs Health Care Fraud Unit (HCFU) oversees program efforts, including providing 
guidance to field offices, to ensure the threat is mitigated in an effective and efficient manner. In 
support of joint agency activities and general threat mitigation efforts the HCFU developed and 
supports four initiatives, including the Health Care Fraud Prevention and Enforcement Action 
Team (HEAT), Large Scale Conspiracies, Major Provider Fraud, and the Prescription Drug 
Initiative.  
HEAT is a DOJ, FBI and HHS Cabinet-level commitment to prevent and prosecute health care 
fraud.  HEAT, which is jointly led by the Deputy Attorney General and HHS Deputy Secretary, 
is comprised of top level law enforcement agents, prosecutors, attorneys, auditors, evaluators, 
and other staff from DOJ, FBI and HHS and their operating divisions, and is dedicated to joint 
efforts across government to both prevent fraud and enforce current anti-fraud laws around the 
country.  The Medicare Fraud Strike Force (Strike Force) teams are a key component of HEAT.  
As part of the HEAT Initiative, the FBI coordinates with the DOJ and HHS-OIG on funding, 
resource allocation, Strike Force expansion, target identification, training, and operations.  The 
FBI supports nine Strike Forces located in Miami, Detroit, Houston (also includes McAllen, 
Texas), New York City (Brooklyn), Tampa, Los Angeles, Chicago, Dallas, Southern Louisiana 
(Baton Rouge and New Orleans), and two pilot programs in Puerto Rico and Washington, DC 
area. In 2018, Strike Force teams were established in Philadelphia and Newark. In addition to 
funding agent resources, the FBI funds undercover operation expenses, financial and 
investigative analysis support, offsite and evidence storage locations, operational travel, and 
other investigative costs.  The Strike Forces have effectively investigated and prosecuted 
individuals and entities that do not provide legitimate health care services, but exist solely for the 
purpose of defrauding Medicare and other federal health care programs.  The FBI participated in 
the June 2018 DOJ National Health Care Fraud and Opioid Takedown resulting in the charging 
of 601 subjects, including 165 doctors, nurses and other licensed medical professionals, for their 
alleged participation in health care fraud schemes involving approximately $2 billion in false 
billings. 162 of these individuals, including 76 doctors, were charged in cases related to the 
prescription drug opioid threat. The continued support of Medicare Strike Force operations is a 
top priority for the FBI.  In addition, the FBI completes coordination and intelligence sharing 
with HHS and DOJ components on other prevention and enforcement activities, including efforts 
associated with the Large Scale Conspiracies, Major Provider Fraud, and Prescription Drug 
Initiatives. 
The Attorney General created the Opioid Fraud and Abuse Detection Unit to surge prosecutorial 
resources to twelve of these judicial districts to prosecute individuals that are contributing to the 
prescription opioid epidemic. As part of this initiative, DOJ appropriated additional funding to 
112  the FBI to support the deployment of dedicated Special Agents to identify, investigate, and 
prosecute individuals who divert prescription opioids in judicial districts in states such as 
Tennessee, North Carolina, West Virginia, and Alabama.  
The Large Scale Conspiracies Initiative seeks to identify and target criminal enterprises and 
other groups whose schemes result in significant losses to health care benefit programs.  
Intelligence efforts for this initiative include information sharing and analysis of billing data with 
HCF enforcement partners.  Investigative assistance provided to field offices as part of the 
initiative can include support for undercover operations, source identification and support, and 
funding of investigative costs.  An example of this was the conviction of a physician in the 
Miami AOR who billed Medicare more than $100 million and was paid over $59 million. The 
doctor was charged in a multiple-count indictment, including 37 counts of health care fraud. The 
doctor was found guilty following an eight week trial and was sentenced to 204 months 
imprisonment and was ordered to pay over $42 million in restitution. In Detroit, a physician was 
convicted of conspiracy to commit health care fraud and health care fraud for submitting in 
excess of over $26 million in claims to Medicare. The physician was sentenced to 180 months 
imprisonment and was ordered to pay over $9 million in restitution. In Dallas, a scheme was 
uncovered involving illegal kickbacks being paid to numerous home health agencies (HHA) and 
beneficiaries for the purpose of billing Medicare approximately $375 million for services neither 
necessary nor provided. The defendant in this case, a co-owner of an HHA, was sentenced to 120 
months imprisonment and ordered to pay over $23 million in restitution. The FBI is committed 
to addressing this type of crime problem through the disruption, dismantlement and prosecution 
of those involved in criminal enterprises and other organized criminal activities. 
The Major Provider Fraud Initiative seeks to identify and target corporate-level groups involved 
in fraud and abuse schemes with significant billing to health care benefit programs.  The related 
schemes are frequently complex, challenging to identify, and can involve conduct that is 
nationwide in scope.  Extensive resources and coordination are frequently required due to the 
complexity and scope of the schemes. Qui tams are a significant intelligence source for these 
types of cases.  These investigations frequently involve pharmaceutical manufacturers, hospital 
corporations, and regional or national medical provider agencies. In addition to the work 
completed at the field office level, and in response to this substantial threat, the FBI has 
established a centralized support team to provide investigative assistance on these cases 
nationwide.  An example of this was the FBI-led investigation of former CEO of Health 
Diagnostics Laboratory Inc. (HDL), two marketers of HDL, and Singulex Inc., who were found 
guilty at trial of violating the Anti-Kickback Statute and the False Claims Act for paying 
kickbacks to physicians in exchange for patient referrals and causing two laboratories to bill 
federal health care programs for medically unnecessary testing. The case resulted in a $114 
million settlement to resolve allegations of $35,074 false claims, worth approximately $17 
million, submitted to Medicare and TRICARE by HDL.  The FBI coordinated efforts in this case 
with DOJ Civil Divisions Commercial Litigation Branch; the USAOs in the District of South 
Carolina, District of Columbia and Middle District of North Carolina; HHS-OIG; OPM-OIG; 
and DCIS-OIG. 
The Prescription Drug Initiative seeks to identify and target criminal enterprises and other groups 
or individuals engaged in prescription drug schemes, and where appropriate prosecute 
113  individuals and entities for improper prescribing and dispensing practices of controlled 
substances.  These schemes have significant impact on public health and safety.  Examples of 
these types of cases include a Kentucky physician who pled guilty to various counts of 
conspiracy, unlawful distribution of controlled substances, and health care fraud and was 
sentenced to 96 months imprisonment.  In Philadelphia, an office manager of a clinic operated a 
large prescription narcotics diversion ring creating and passing more than 2,000 fraudulent 
prescriptions for Oxycodone. The office manager was sentenced to 168 months imprisonment. 
With the Attorney Generals allocation of funds to the FBI as part of the Opioid Fraud and 
Abuse Detection Unit, the FBI is dedicated to prioritizing prescription drug scheme 
investigations, particularly in at-risk federal judicial districts, with enhanced support from the 
Prescription Drug Initiative.  
The FBI actively provides training and guidance on health care fraud matters.  The FBI has 
teamed with the DOJ, HHS, and private insurance organizations to provide training in the 
priority threat areas of health care fraud.  Funded training has included innovative methods of 
employing advanced investigative techniques; basic health care fraud training for FBI Special 
Agents and professional staff newly assigned to investigate health care fraud; and sessions on 
new and current health care fraud trends and issues.  FBI personnel training opportunities 
included sessions offered by the FBI, other government agencies and the private sector.  In FY 
2018, more than 264 FBI health care fraud investigators and analysts received training.  FBI 
personnel also conducted a wide range of training for external audiences, including private 
insurance and regulatory personnel.  
Funding received by the FBI is used to pay direct and indirect personnel-related costs associated 
with the 814 funded positions.  Funds not used directly for personnel matters are used to provide 
operational support for health care fraud investigations, national initiatives, training, specialized 
equipment, and Strike Force operations. 
   
114  Return on Investment Calculation 
  The return on investment (ROI) for the HCFAC program is calculated by dividing the total 
monetary results to the Federal government (not including relator payments) by the annual 
appropriation for the HCFAC Account in a given year (not including portions of CMS 
funding dedicated to the Medicare Integrity Program listed in the table on page 114).   
  The monetary results include deposits and transfers to the Medicare Part A Trust Fund and 
the Treasury, as well as restitution and compensatory damages to Federal agencies. 
  The HCFAC Account is made up of three funding sources: mandatory funding for HHS and 
DOJ, including HHS-OIG, appropriated through Section 1817(k)(3)(A) of the Social Security 
Act; mandatory funding for FBI activities appropriated through Section 1817(k)(3)(B) of the 
Social Security Act; and discretionary funding for the HCFAC Account appropriated through 
the annual Labor-HHS-Education appropriation.   
  FBI mandatory HIPAA funding is included in the HCFAC ROI calculations given the 
important role the FBI plays in achieving the monetary results reflected in the HCFAC 
annual report and because that statute states that the funds are for the same purposes as the 
funds provided for HHS and DOJ under the Social Security Act.  However, FBI spending 
and monetary results are not required to be reported per the statute.  Therefore, even though 
the FBI mandatory HIPAA funding is included in the HCFAC ROI calculation, it is not 
reflected in the table on page 7 of this report.   
  Only certain portions of discretionary HCFAC Account funding are included in the ROI 
calculation.  All discretionary HCFAC funding for HHS-OIG and DOJ are included in the 
HCFAC report ROI since they spend their discretionary funding on the same types of 
activities that they support with mandatory funding.  Only the portion of CMS Medicare 
discretionary HCFAC funding that supports law enforcement is included in the HCFAC 
report ROI.  The remainder of CMSs HCFAC Medicare discretionary funding supports 
activities in the Medicare Integrity Program (MIP) that are included in the MIP ROI, which 
calculates the impact of the prevention activities supported by the MIP mandatory and 
discretionary funds is calculated separately from the HCFAC ROI and is reported outside of 
the HCFAC report.  Impacts for both the CMS Medicaid and Medicare program integrity 
funding are included in a separate report.    
115  Total Health Care Fraud and Abuse Control Resources 
The table below sets forth HCFAC funding, by agency, for health care fraud and abuse control 
activities in FY 2018, including sequester reductions.  The FBI also receives a stipulated amount 
of HIPAA funding for use in support of the Fraud and Abuse Control Program, which is shown 
below.  Separately, CMS receives additional Mandatory Resources under the Medicare Integrity 
Program (section 1817(k)(4) of the Social Security Act).  The inclusion of the activities 
supported with these funds is not required in this report, and this information is included for 
informational purposes.  Since 2009, Congress has also appropriated annual amounts to help 
carry out health care fraud and abuse control activities within DOJ and HHS.  Those amounts are 
set forth as Discretionary Resources in the table below and the results of the efforts supported 
with these funds are contained within this report. 
Mandatory Resources24  Fiscal Year 2018 
Office of Inspector General  $190,388,777 
Health and Human Services Wedge25  36,414,133 
Medicare Integrity Program26  877,243,936 
MIP/Medicare (non-add)  809,763,633 
Medi-Medi (non-add)  67,480,303 
Department of Justice Wedge2  59,444,617 
Federal Bureau of Investigation27  134,525,069 
Subtotal, Mandatory HCFAC  1,298,016,532 
Discretionary Resources   
Office of Inspector General  $84,398,000 
CMS Program Integrity  584,766,000 
Medicare Program Integrity (Non-Add)  482,368,000 
Medicaid Program Integrity (Non-Add)28  84,398,000 
         Senior Medicare Patrols (ACL Non-Add)29  18,000,000 
Department of Justice  75,836,000 
Subtotal, Discretionary HCFAC  745,000,000 
Grand Total, HCFAC  2,043,016,532 
                                                 
24 All mandatory resources are post-sequester. 
25 The HHS and DOJ Wedge funds are divided among multiple agencies within HHS and DOJ.  Page 7 of this report 
includes the allocations of the HHS and DOJ Wedge by agency or activity. 
26 Medicare Integrity Program (MIP) and Medi-Medi fund fraud prevention and detection activities within Medicare 
and Medicaid are not part of this report to Congress.  A separate report to Congress addresses MIP activities. 
27 The FBI receives funding annually to conduct anti-fraud activities authorized by HIPAA.  This funding is 
included in the HCFAC ROI calculation for this report. 
28 This does not include the Medicaid Integrity Program authorized in the Deficit Reduction Act of 2005, which 
receives funding separately from the HCFAC account. 
29 The Consolidated Appropriations Act of 2016 requires that the full cost of the Senior Medicare Patrol funding be 
supported by discretionary HCFAC funds. 
116  Glossary of Common Terms 
The AccountThe Health Care Fraud and Abuse Control Account 
ACA  Affordable Care Act 
AKS Anti-Kickback Statute  
ACLDepartment of Health and Human Services, Administration for Community Living 
AUSAAssistant United States Attorney 
CHIPChildrens Health Insurance Program 
CIACorporate Integrity Agreement 
CMP  Civil Monetary Penalty 
CMPLCivil Monetary Penalties Law 
CMSDepartment of Health and Human Services, Centers for Medicare & Medicaid Services    
CPICenter for Program Integrity 
CYCalendar Year  
DEADrug Enforcement Administration 
DMEDurable Medical Equipment 
DOJThe Department of Justice 
FBIFederal Bureau of Investigation 
FCAFalse Claims Act 
FDAFood and Drug Administration 
FWAFraud, Waste, and Abuse 
FYFiscal Year 
HCFACHealth Care Fraud and Abuse Control Program or the Program 
HEATHealth Care Fraud Prevention & Enforcement Action Team 
HFPPHealth care Fraud Prevention Partnership  
HHAHome Health Agency 
117  HHSThe Department of Health and Human Services 
HHS-OIGThe Department of Health and Human Services - Office of the Inspector General 
HIHospital Insurance Trust Fund 
HIPAA  The Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 
MAOMedicare Advantage Organization 
MFCUMedicaid Fraud Control Unit 
MEDICMedicare Drug Integrity Contractors 
OCGSOrganized Crime and Gang Section 
OGCOffice of the General Counsel, Department of Health and Human Services  
PECOSProvider Enrollment, Chain and Ownership System  
PERMPayment Error Rate Measurement 
PFPPharmaceutical Fraud Pilot Program 
The ProgramThe Health Care Fraud and Abuse Control Program 
SecretaryThe Secretary of the Department of Health and Human Services 
SMPSenior Medicare Patrol 
UPICUnified Program Integrity Contractor 
USAOUnited States Attorneys Office 
ZPICZone Program Integrity Contractor 
118