Department of Health and Human Services

OFFICE OF

INSPECTOR GENERAL

 

MEDICARE ADVANTAGE 

ORGANIZATIONS’ IDENTIFICATION 

OF POTENTIAL FRAUD AND ABUSE 

Daniel R. Levinson 

Inspector General

February 2012

OEI-03-10-00310 
EXECUTIVE SUMMARY: MEDICARE ADVANTAGE ORGANIZATIONS’ 

IDENTIFICATION OF POTENTIAL FRAUD AND ABUSE

OEI-03-10-00310

WHY WE DID THIS STUDY 

The Medicare Advantage (MA) program has become a significant part of Medicare in both 

cost and enrollment. MA organizations offer plans under Medicare Part C that cover services 

a beneficiary would receive under Medicare Parts A and B; many plans also offer prescription 

drug coverage under Part D. MA organizations’ efforts to identify and address potential fraud 

and abuse are crucial to protecting the integrity of the MA program. Prior to this report, no 

study had examined potential fraud and abuse identified by MA organizations. CMS requires 

MA organizations to have compliance plans that include measures to detect, correct, and 

prevent fraud, waste, and abuse. However, CMS does not require MA organizations to report 

the results of their efforts to identify and address potential fraud and abuse incidents.

HOW WE DID THIS STUDY

We collected and reviewed data from 170 of 188 MA organizations that offered plans in 

2009. These MA organizations represented 4,547 plans nationwide and accounted for 

94 percent of all Medicare beneficiaries enrolled in MA plans in 2009. We collected and 

summarized the numbers of potential fraud and abuse incidents, inquiries, corrective actions, 

and referrals related to these plans in 2009. We also categorized the types of potential fraud 

and abuse incidents and corrective actions that MA organizations reported.

WHAT WE FOUND

Nineteen percent of MA organizations did not identify any potential fraud and abuse incidents 

related to their Part C health benefits and Part D drug benefits in 2009. MA organizations that 

identified potential fraud and abuse in 2009 reported between 1 incident and 1.1 million 

incidents. Three MA organizations identified 95 percent of the total 1.4 million reported 

incidents. Differences in the way organizations defined and detected potential fraud and 

abuse may account for some of the variability in the number of incidents they identified. 

While CMS requires MA organizations to initiate inquiries and corrective actions where 

appropriate, not all MA organizations took such steps in response to incidents they identified. 

Overall, MA organizations sent 2,656 referrals of potential fraud and abuse incidents to other 

entities for further investigation in 2009.

WHAT WE RECOMMEND

Our findings indicate that MA organizations lack a common understanding of key fraud and 

abuse program terms and raise questions about whether all MA organizations are 

implementing their programs to detect and address potential fraud and abuse effectively. 

Therefore, we recommend that CMS: (1) ensure that MA organizations are implementing 

programs to detect, correct, and prevent fraud, waste, and abuse, as required in their 

compliance plans, so that all potential Part C and Part D fraud and abuse incidents are 
identified; (2) review MA organizations to determine why certain organizations reported 

especially high or low volumes of potential Part C and Part D fraud and abuse incidents and 

inquiries; (3) develop specific guidance for MA organizations on defining potential Part C and 

Part D fraud and abuse incidents and inquiries; (4) require MA organizations to report to CMS 

aggregate data related to their Part C and Part D antifraud, waste, and abuse activities; 

(5) ensure that all MA organizations are responding appropriately to potential fraud and abuse 

incidents; and (6) require MA organizations to refer potential fraud and abuse incidents that 

may warrant further investigation to CMS or other appropriate entities. CMS concurred with 

our first, third, and fifth recommendations. CMS did not concur or concurred in part with our 

second, fourth, and sixth recommendations.
TABLE OF CONTENTS

Objectives ....................................................................................................1

Background..................................................................................................1

Methodology................................................................................................5

Findings........................................................................................................8

Nineteen percent of MA organizations did not identify any 

potential fraud and abuse incidents in 2009 .......................................8

MA organizations that identified fraud and abuse reported 

between 1 incident and 1.1 million incidents; differences in the 

way MA organizations defined and detected potential fraud and 

abuse may account for some of this variability..................................8

CMS requires MA organizations to initiate inquiries and 

corrective actions where appropriate, but not all MA organizations 

took such steps in response to incidents they identified...................10

MA organizations sent 2,656 referrals of potential Part C and 

Part D fraud and abuse incidents to other entities in 2009...............12

Recommendations......................................................................................14

Agency Comments and Office of Inspector General Response .......16

Appendixes ................................................................................................19

A: Potential Fraud and Abuse Incidents, Inquiries, Corrective 

Actions, and Referrals for All Medicare Advantage 

Organizations in 2009 ......................................................................19

B: Fraud and Abuse Activities by MA Organization for 2009........20

C: Types of Potential Part C and Part D Fraud and Abuse 

Identified by Medicare Advantage Organizations in 2009...............35

D: Types of Corrective Actions Initiated by Medicare 

Advantage Organizations in 2009 ....................................................40

E: Referrals to Other Entities for Further Investigation by 

Medicare Advantage Organizations in 2009 ....................................41

F: Agency Comments......................................................................42

Acknowledgments......................................................................................45
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 1

OBJECTIVES

1. To determine the extent to which Medicare Advantage (MA) 

organizations identify potential fraud and abuse related to their Part C 

and, if applicable, Part D plans.

2. To determine the extent to which MA organizations conduct inquiries, 

initiate corrective actions, and make referrals for further investigation 

in response to potential fraud and abuse incidents.

BACKGROUND

Medicare beneficiaries generally have the option to receive their benefits 

through the traditional Medicare fee-for-service program or through 

private plans. Private insurance companies, known as MA organizations, 

contract with the Centers for Medicare & Medicaid Services (CMS) under 

Medicare Part C to provide beneficiaries with private health plan options, 

including managed care plans. MA plans include coverage for services 

that a beneficiary would receive under Medicare Parts A and B and may 

cover additional services, such as outpatient prescription drugs. 

In 2010, 24 percent of Medicare beneficiaries were enrolled in MA plans.1

MA program expenses were $115 billion of the total $504 billion in 

Medicare benefit payment expenses in fiscal year 2010.2 For 2011, the 

Medicare Payment Advisory Commission (MedPAC) estimates that CMS 

will spend approximately 10 percent more for beneficiaries enrolled in 

MA plans than CMS would have spent if the beneficiaries had stayed in 

fee-for-service Medicare.3 In its Fiscal Year 2010 Agency Financial 

Report, the Department of Health and Human Services (HHS) reported a 

composite payment error rate of 14.1 percent for the MA program.4

The MA program has become a significant component of Medicare both in 

cost and enrollment; however, prior to this report, no study had examined 

potential fraud and abuse identified by MA organizations. This report 

provides details on the results of MA organizations’ efforts to identify and 

address potential Part C and Part D fraud and abuse. 

1 Kaiser Family Foundation (KFF), Medicare Chartbook, Fourth Edition, November 2010. Accessed at 

http://facts.kff.org/chart.aspx?cb=58&sctn=165&ch=1755 on July 7, 2011.

2 CMS, CMS Financial Report Fiscal Year 2010, November 2010, p. 5. Accessed at 

http://www.cms.gov/CFOReport/Downloads/2010_CMS_Financial_Report.pdf on July 7, 2011.

3 MedPAC, Report to the Congress: Medicare and the Health Care Delivery System, June 2011, p. 70. Accessed at 

http://www.medpac.gov/documents/jun11_entirereport.pdf on July 7, 2011.

4 HHS, FY 2010 Agency Financial Report, November 15, 2010, p. III-18. Accessed at 

http://www.hhs.gov/afr/2010afr-fullreport.pdf on August 9, 2011. 
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 2 

Medicare Advantage Program

The Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (MMA) made several important changes to Medicare managed care 

and renamed the program Medicare Advantage.5 The MMA also 

established Part D to provide an optional outpatient prescription drug 

benefit for all beneficiaries.6 Many MA organizations offer managed care 

plans that provide beneficiaries with additional coverage for outpatient 

prescription drugs through Part D. In fact, MA organizations that offer 

plans such as health maintenance organizations (HMO) must offer at least 

one plan that includes Part D prescription drug coverage.7

In 2009, 188 MA organizations offered 4,718 plans across the Nation. 

Sixty-seven percent of the 10.9 million beneficiaries enrolled in MA plans 

in 2009 were in HMOs or local preferred provider organization plans. In 

the same year, 3,471 of 4,718 MA plans offered Part D prescription drug 

coverage. Eighty-seven percent of MA beneficiaries were enrolled in 

these MA Prescription Drug (MAPD) plans in 2009. 

 Therefore, 

many MA organizations operate as both Part C and Part D contractors. 

Detecting and Deterring Fraud and Abuse

MA organizations’ processes and programs for identifying and addressing 

potential fraud and abuse are critical to protecting the integrity of the MA 

program. CMS requires MA organizations to have compliance plans that 

include measures to detect, correct, and prevent fraud, waste, and abuse.8 

Among other requirements, these compliance plans must include 

procedures for ensuring prompt responses to detected instances of fraud 

and abuse, such as conducting timely inquiries, initiating corrective 

actions (e.g., repayment of overpayments, disciplinary actions against 

responsible employees), and voluntarily self-reporting fraud and abuse to 

CMS.9, 10 In a 2010 Call Letter to MA organizations, CMS announced that 

it planned to assess the effectiveness of MA organizations’ compliance 

5 MMA, P.L. 108-173 § 201, 42 U.S.C. § 1395w-21 note.

6 MMA, P.L. 108-173 § 101, Social Security Act, title XVIII, part D, 42 U.S.C. § 1395w-101, et seq.

7 42 CFR § 422.4(c); 42 CFR § 423.104(f)(3); CMS, Medicare Managed Care Manual, Pub. No. 100-16 

(Rev. 87, June 8, 2007), ch. 4, § 10.3.

8 42 CFR § 422.503(b)(4)(vi); 42 CFR § 423.504(b)(4)(vi).

9 42 CFR § 422.503(b)(4)(vi)(G); 42 CFR § 423.504(b)(4)(vi)(G).

10 In the preamble to the December 5, 2007, Final Rule, 76 Fed. Reg. 68700, CMS stated that it is committed to 

adopting a mandatory self-reporting requirement. As of January 2012, CMS had not issued any regulation mandating 

such a requirement.
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 3

plans during 2010.11 CMS conducted 27 of these fraud and abuse 

compliance plan audits in 2010.12

Although private managed care options have been available to Medicare 

beneficiaries for many years, CMS has only recently selected contractors 

to oversee and conduct reviews of MA program integrity. In 2008, CMS 

expanded the Medicare drug integrity contractors’ (MEDIC) 

responsibilities to include not only Part D but also Part C program 

integrity activities.

Fraud and Abuse Incidents. In its Medicare Program Integrity Manual, 

CMS defined fraud as “the intentional deception or misrepresentation that 

[an] individual knows to be false or does not believe to be true, and the 

individual makes knowing that the deception could result in some 

unauthorized benefit to himself/herself or some other person.”13 CMS 

defined abuse as “[b]illing Medicare for services that are not covered or 

are not correctly coded.”14 MA organizations may identify potential fraud 

and abuse incidents through internal efforts, such as claim reviews and 

routine audits, or through external sources, such as complaints from 

beneficiaries and referrals from law enforcement agencies.15

Many different types of fraud and abuse may occur in MA organizations. 

Fraud may be committed by MA organizations themselves, within their 

network of contracted providers, or by beneficiaries. Examples of fraud 

and abuse within an MA organization include improper marketing and 

enrollment practices, such as misrepresenting covered benefits to 

prospective enrollees; arranging inappropriate payment and financial 

practices with contracted providers; and denying payment for 

Medicare-approved treatments. Examples of fraud and abuse by 

contracted providers include undertreating patients, placing unreasonable 

restrictions on referrals for specialists or ancillary services 

(e.g., x-ray, imaging, laboratory), and inappropriate prescription 

dispensing. Examples of fraud and abuse by beneficiaries include 

diverting prescriptions, stockpiling medications, and misrepresenting 

eligibility information to obtain services.

 

11 CMS, 2010 Call Letter, March 30, 2009, p. 26. Accessed at 

http://www.cms.gov/PrescriptionDrugCovContra/Downloads/2010CallLetter.pdf on May 12, 2010.

12 Director, Program Compliance and Oversight Group, CMS, presentation slides (pp. 4–7), CMS Compliance 

Program Audits: Medicare Advantage & Prescription Drug Plan Sponsors, July 6, 2011, for the HHS 

Office of Inspector General (OIG).

13 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, Exhibit 1-Definitions.

14 Ibid.

15 42 CFR § 422.503(b)(4)(vi)(F); 42 CFR § 423.504(b)(4)(vi)(F).
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 4 

Inquiries. MA organizations are required to conduct a timely, reasonable 

inquiry when evidence suggests potential fraud and abuse related to 

payment or delivery of items or services under the contract.16

Corrective Actions and Referrals. In response to potential fraud and 

abuse, MA organizations are required to carry out appropriate corrective 

actions.17

MA organizations may refer potential fraud and abuse incidents to a 

number of other entities for further investigation, including CMS, State 

agencies, State insurance commissioners, the Department of 

Justice (DOJ), OIG, and local law enforcement agencies. CMS also 

recommends that MA organizations have procedures in place to 

“voluntarily self-report potential fraud or misconduct related to the MA 

program to CMS or its designee.”

 Corrective actions are measures that an MA organization takes 

to correct a current incident of potential fraud and abuse or to reduce the 

risk that fraud and abuse will occur in the future. Examples of corrective 

actions are repayment of overpayments; provider education; procedure 

changes; and disciplinary action against responsible individuals, including 

termination from a network. An organization may perform multiple 

corrective actions in response to an incident of potential fraud and abuse, 

such as requiring a provider to repay an overpayment and subjecting the 

provider’s future claims to prepayment review. 

18

Fraud and Abuse Reporting. In its comments on an October 2008 OIG 

report, CMS stated that it “believes that it is important for the government 

to have information on potential fraud, waste, and abuse as soon as 

possible ...”19 However, CMS does not require MA organizations to 

report information on their identification of potential fraud and abuse 

beyond the requirement to report the number of enrollee grievances related 

to fraud and abuse each quarter.20 Beginning in calendar year 2010, 

MAPD plans may voluntarily report to CMS aggregate data related to 

their Part D antifraud, waste, and abuse activities, including the number of 

incidents of potential fraud and abuse identified, inquiries and corrective 

actions initiated, and potential fraud referrals made to CMS or law 

enforcement authorities.21

16 42 CFR § 422.503(b)(4)(vi)(G)(1); 42 CFR § 423.504(b)(4)(vi)(G)(1).

17 42 CFR § 422.503(b)(4)(vi)(G)(2); 42 CFR § 423.504(b)(4)(vi)(G)(2).

18 42 CFR § 422.503(b)(4)(vi)(G)(3); 42 CFR § 423.504(b)(4)(vi)(G)(3).

19 OIG, Medicare Drug Plan Sponsors’ Identification of Potential Fraud and Abuse, OEI-03-07-00380, 

October 2008, p. 25. Accessed at http://oig.hhs.gov/oei/reports/oei-03-07-00380.pdf on July 12, 2011.

20 CMS, Medicare Part C Plan Reporting Requirements Technical Specification Document, May 7, 2011, 

pp. 30–32.

21 CMS, Medicare Part D Reporting Requirements, January 1, 2010, § XIV. 
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 5 

Related OIG Work

In a 2008 report, OIG found that 24 of 86 stand-alone Part D plan

sponsors did not identify any potential fraud and abuse incidents in the 

first 6 months of 2007.22 OIG also found that not all stand-alone Part D 

plan sponsors that identified potential fraud and abuse incidents conducted 

inquiries, initiated corrective actions, or made referrals for further 

investigation. Stand-alone Part D plan sponsors are similar to MA 

organizations in that they are private companies that contract with CMS to 

offer health plans to beneficiaries. Both Part D plan sponsors and MA 

organizations contract with health care providers and facilities to create 

networks to provide health care services to Medicare beneficiaries.

In a 1998 report regarding CMS contractor fraud units, OIG found 

vulnerabilities in these contractors’ efforts to identify potential fraud and 

abuse.23 OIG found that the meaning of key words and terms related to 

fraud unit work varied across contractors and that this variation hindered 

CMS’s ability to interpret data and measure fraud unit performance. 

METHODOLOGY

Scope

We determined the extent to which MA organizations identified and 

addressed potential fraud and abuse in 2009. During this period, there 

were 188 MA organizations across the country. We did not include 14 MA 

organizations in our review that had active contracts in 2009 because the 

contracts were no longer active or the organizations were under 

investigation during the time of our data collection. We excluded data 

received from four MA organizations from our analysis because they 

could not separate incidents related to their MA and MAPD plans from 

incidents related to their other lines of Medicare or commercial business.

Of the 188 MA organizations in 2009, we reviewed data from 170, which 

provided information on potential fraud and abuse incidents related to 

their MA or MAPD plans.24 These 170 organizations accounted for a total 

of 597 MA contracts, 4,547 MA plans, and 10,581,744 enrollees. 

Data Collection

CMS. We downloaded the MA contract enrollment data files from CMS’s 

Web site for 2009. These files contained the number of enrollees for each 

MA contract as well as information about the type of contract. We used 

these data to identify MA organizations with MA and MAPD contracts in 

22 OIG, Medicare Drug Plan Sponsors’ Identification of Potential Fraud and Abuse, OEI-03-07-00380, October 2008. 

23 OIG, Fiscal Intermediary Fraud Units, OEI-03-97-00350, November 1998.

24 One of the 170 MA organizations did not operate any MAPD plans in 2009. 
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 6 

2009. We excluded MA organizations that had only cost, demonstration, 

or Program of All-Inclusive Care for the Elderly (PACE) contracts.25, 26, 27 

We downloaded the compliance officer contact information from CMS’s 

Health Plan Management System for the remaining MA organizations.

MA Organizations

Our electronic survey software assigned an identification number to each 

MA organization in our review. We use these identification numbers in 

our report to enable the reader to identify information related to the same 

MA organization across the findings and in Appendix B while still 

maintaining the confidentiality of the organization.

. We designed an electronic survey and sent it to MA 

organizations’ Medicare compliance officers. We requested that MA 

organizations report how they identified potential fraud and abuse and the 

number of incidents of potential fraud and abuse they identified in 2009 

for all of their MA contracts, including MAPD contracts. For these 

incidents, we asked MA organizations to report the types of potential fraud 

and abuse identified, the strategies that yielded the potential fraud and 

abuse incidents, the number of inquiries conducted, and the number and 

types of corrective actions initiated. We also requested the number of 

incidents they referred to CMS, MEDICs, law enforcement authorities, 

and other entities for further investigation. We received responses from all 

of the MA organizations we surveyed. 

Analysis 

We included survey responses from 170 MA organizations in our analysis. 

We reviewed, coded, and summarized narrative information regarding 

strategies organizations used to identify potential fraud and abuse 

incidents. We calculated the number of potential Part C and Part D 

incidents identified across MA organizations in 2009. We grouped 

organizations into six size categories based on the number of enrollees. 

We categorized the types of incidents reported and calculated the total 

number of incidents of each type. We calculated the total number of 

inquiries conducted in response to incidents. We also calculated and 

summarized the number and types of corrective actions initiated in 

response to incidents. Finally, we calculated the total number of incidents 

referred to other entities for further investigation.

25 Medicare payments for cost contracts are based on the reasonable costs of providing services to enrollees. 

26 Demonstration contracts test improvements in Medicare coverage, payment, and quality of care. These contracts 

usually operate for a limited time, for a specific group of people, and/or are offered only in specific areas.

27 PACE is a benefit that features a comprehensive service delivery system and integrated Medicare and Medicaid 

financing.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 7 

Limitations

The information we received from MA organizations was self-reported. 

We did not collect from MA organizations any documentation relating to 

the potential fraud and abuse incidents, inquiries, corrective actions, or 

referrals they reported to verify their responses to our survey. 

Standards

This study was conducted in accordance with the Quality Standards for 

Inspection and Evaluation issued by the Council of the Inspectors General 

on Integrity and Efficiency.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 8 

FINDINGS

Nineteen percent of MA organizations did not identify 

any potential fraud and abuse incidents in 2009

All of the MA organizations in our review reported having compliance 

plans in place as required by CMS. These compliance plans must include 

a program to detect, correct, and prevent fraud, waste, and abuse.28

An additional 24 organizations identified Part C incidents but no Part D 

incidents. Another 11 MA organizations identified Part D incidents but no 

Part C incidents.

 

However, the efforts of 19 percent of MA organizations (33 of 170) to 

detect fraud and abuse did not yield any potential incidents related to both 

their Part C health benefits and Part D drug benefits in 2009. 

Enrollment in these 68 MA organizations totaled 571,623 beneficiaries 

and ranged from an organization with 114 members to an organization 

with 55,876 members. Fourteen of the sixty-eight organizations 

accounted for fewer than 1,000 enrollees each. 

MA organizations that identified fraud and abuse 

reported between 1 incident and 1.1 million incidents; 

differences in the way MA organizations defined and 

detected potential fraud and abuse may account for 

some of this variability

One hundred thirty-seven MA organizations identified a total of 

1,431,683 incidents of potential Part C and Part D fraud and abuse 

in 2009. The volume of incidents identified varied significantly. 

Fourteen organizations each identified more than 1,000 incidents. In 

contrast, 41 organizations each identified fewer than 10 incidents in 2009. 

Appendix A provides the total numbers of incidents identified across MA 

organizations. Appendix B provides the numbers of incidents reported by 

individual MA organizations. 

Three MA organizations identified 95 percent of all potential 

fraud and abuse incidents in 2009

Three organizations were responsible for 1,358,184, or 95 percent, of all 

potential Part C and Part D incidents. The majority of these were related 

to two MA organizations’ Part C health benefits. Table 1 provides specific 

information on the numbers of MA enrollees, potential Part C incidents, 

and potential Part D incidents for each of these three MA organizations. 

28 42 CFR § 422.503(b)(4)(vi); 42 CFR § 423.504(b)(4)(vi).
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 9 

Table 1: Three MA Organizations Were Responsible for 95 Percent of Potential 

Fraud and Abuse Incidents Identified in 2009

MA 

Organization 

Identifier

Number of MA 

Enrollees

Number of 

Potential 

Part C Fraud 

and Abuse 

Incidents

Number of 

Potential 

Part D Fraud 

and Abuse 

Incidents

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Percentage of 

All Incidents 

Identified in 

2009 

(1,431,683)

178 Over 250,000 1,010,233 100,909 1,111,142 78%

34 20,000 to 49,999 200,111 2,377 202,488 14%

112 5,000 to 19,999 0 44,554 44,554 3%

 Total 1,210,344 147,840 1,358,184 95%

 Source: OIG analysis of MA organizations’ survey responses and CMS enrollment data for 2009.

Ninety-five percent of the incidents (1,290,656 of 1,358,184) identified by 

these 3 MA organizations were associated with 3 types of potential fraud 

and abuse: improper coding (1,153,996 incidents), inappropriate billing 

for prescriptions (104,550), and inappropriate prescription dispensing 

(32,110). Appendix C contains a complete list of the number of incidents 

associated with each type of potential fraud and abuse reported by MA 

organizations for both Part C and Part D. 

The remaining 134 MA organizations identified 73,499 potential 

Part C and Part D fraud and abuse incidents in 2009

Excluding the incidents identified by the 3 MA organizations described 

above, 134 organizations identified a total of 73,499 potential fraud and 

abuse incidents in 2009. Eighty-three percent of these were related to Part 

C. Specifically, 123 organizations identified 61,188 potential Part C fraud 

and abuse incidents, and 108 organizations identified 12,311 potential 

Part D fraud and abuse incidents. 

These 134 organizations enrolled 9.9 million beneficiaries in 2009. All 

MA organizations with more than 50,000 enrollees identified at least 

1 incident of potential fraud and abuse, yet some smaller MA 

organizations identified more incidents than their counterparts with larger 

enrollment. For example, an organization with more than 

250,000 enrollees identified 37 potential Part C fraud and abuse incidents 

and 8 potential Part D incidents. Another organization, which had fewer 

than 5,000 enrollees, identified 7,787 potential Part C fraud and abuse 

incidents and 154 potential Part D incidents. 

These 134 MA organizations reported 32 different types of Part C 

incidents in 2009. The most common type of incident related to their 

Part C health benefits was improper coding of services. MA organizations 

identified 25 different types of potential fraud and abuse incidents related 

to Part D; inappropriate prescription dispensing was the most common 

type.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 10

Differences in the way MA organizations defined and detected 

potential fraud and abuse may account in part for the wide 

variation in the number of incidents identified

The number of potential fraud and abuse incidents reported by MA 

organizations may depend on how broadly they define potential fraud and 

abuse. MA organization 178 identified the highest number of incidents 

in 2009. This organization reported that it took “an expansive view” of 

potential fraud and abuse. It defined a potential fraud and abuse incident 

as any claim line flagged by its prepayment edit system. MA 

organization 34 also identified a high number of incidents and reported 

that it used claims editing and auditing software to screen claims for 

potential improper coding. This organization considered all claims 

identified by this software as potential fraud and abuse incidents. Other 

organizations also described using claims monitoring, prepayment 

reviews, and software packages specifically designed to screen claims to 

identify potential fraud and abuse. However, some of these MA 

organizations reported low numbers of incidents. Therefore, it would 

seem that not all MA organizations defined every item identified by these 

detection methods as a potential fraud and abuse incident. 

Some MA organizations did not report using any proactive methods 

(e.g., claims monitoring) to identify their potential Part C and/or Part D 

fraud and abuse incidents. Many organizations indicated that they used 

hotlines and other reporting and complaint mechanisms, along with other 

types of fraud and abuse detection methods, to identify potential fraud and 

abuse. However, some organizations reported relying solely on hotlines 

and complaints to identify potential Part C and/or Part D incidents. These 

organizations identified 12 or fewer incidents in 2009. 

CMS requires MA organizations to initiate inquiries 

and corrective actions where appropriate, but not all 

MA organizations took such steps in response to 

incidents they identified

CMS requires MA organizations to conduct a timely, reasonable inquiry 

when evidence suggests potential fraud or abuse related to payment or 

delivery of items or services under their contracts.29 In addition, CMS 

requires MA organizations to carry out appropriate corrective actions in 

response to potential fraud and abuse.30 However, 11 organizations did 

not initiate any inquiries in response to 14,681 potential Part C fraud and 

abuse incidents they identified in 2009; 19 organizations did not initiate 

29 42 CFR § 422.503(b)(4)(vi)(G)(1).

30 42 CFR § 422.503(b)(4)(vi)(G)(2).
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 11

any inquiries in response to 3,387 Part D incidents. Furthermore, 

25 organizations did not initiate any corrective actions in response to 

5,300 Part C incidents they identified in 2009, and 39 organizations did 

not initiate any corrective actions for 2,979 Part D incidents. 

Appendix A provides the total numbers of potential Part C and Part D 

fraud and abuse incidents, inquiries, and corrective actions reported by 

MA organizations.

MA organizations reported initiating 1.2 million inquiries; 

however, MA organizations had different interpretations of 

what constitutes an inquiry

MA organizations initiated a total of 1,188,269 inquiries in response 

to the potential Part C and Part D fraud and abuse incidents they 

identified in 2009. MA organizations each initiated between 

1 and 1,111,142 inquiries.

Differences in the ways some MA organizations defined and tracked 

inquiries may account for some of the variation in the number of inquiries 

they reported. For example, MA organization 178 reported that it initiated 

the same number of inquiries as the number of potential fraud and abuse 

incidents it identified. Specifically, this organization reported conducting 

1,010,233 Part C inquiries and 100,909 Part D inquiries. This 

organization defined potential fraud and abuse incidents as all claim lines 

caught by its prepayment edit system and considered the automated 

remittance advice letters generated by the prepayment system to be 

inquiries.31

Although we did not ask all MA organizations to describe how they 

defined inquiries, we asked for descriptions from seven organizations that 

reported conducting more inquiries than the total number of potential 

fraud and abuse incidents they identified. One of these defined the 

number of inquiries it conducted as the number of internal staff members 

who investigated a particular potential fraud and abuse incident. Another 

organization defined inquiries as “the number of unique contacts that 

[their] organization made during the investigation of each incident.” A 

third organization reported that some of the potential fraud and abuse 

incidents it identified were associated with “more than one type of 

suspicious activity which resulted in more than one inquiry.” This 

organization defined an inquiry as an “investigative action.”

31 A remittance advice letter is a notice of payments and adjustments sent to providers of health care services. It 

explains the payments and adjustments made on the providers’ processed claims.
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 12

MA organizations reported initiating 1.1 million corrective 

actions; 1 organization represented 98 percent of these 

MA organizations reported initiating a total of 1,134,063 corrective 

actions in response to the potential fraud and abuse incidents they 

identified in 2009. Ninety-eight percent of these corrective actions were 

initiated by MA organization 178, which defined the prepayment claim 

edits it used to identify potential fraud and abuse as corrective actions. 

This organization reported that it initiated 1,111,140 corrective actions in 

response to the 1,111,142 potential Part C and Part D incidents it 

identified. Another 25 organizations initiated at least as many corrective 

actions as the number of incidents they reported in 2009. In contrast, 

6 of the organizations that identified more than 1,000 potential fraud and 

abuse incidents initiated fewer than 8 corrective actions for every 

100 incidents they identified. For example, MA organization 36 initiated 

2 corrective actions in response to 12,512 incidents. Appendix D provides 

a complete list of the types of corrective actions initiated by MA 

organizations.

MA organizations sent 2,656 referrals of potential 

Part C and Part D fraud and abuse incidents to other 

entities in 2009

MA organizations sent a total of 2,656 referrals of potential Part C and 

Part D fraud and abuse incidents to more than 13 different entities for 

further investigation in 2009. MA organizations may send the same 

incident to more than one entity. For example, one organization referred 

the same Part C incident to both DOJ and State and local law enforcement 

authorities. Appendix E provides the numbers of Part C and Part D 

referrals MA organizations sent to other entities in 2009.

Two of the three MA organizations that reported the highest 

numbers of incidents made only 40 referrals in 2009

Although MA organization 178 conducted over 1 million inquiries and 

initiated over 1 million corrective actions, it referred only 39 of the 

1,111,142 potential fraud and abuse incidents it identified to other entities 

for further investigation. All but one of these referrals were directed to 

MEDICs. MA organization 34 referred only 1 of the 202,488 incidents it

identified to a MEDIC for further investigation. MA organization 112 did 

not refer any of the 44,554 Part D incidents it identified in 2009.

The remaining MA organizations made 2,616 referrals of 

potential Part C and Part D incidents in 2009

Seventy MA organizations sent a total of 1,689 referrals of potential 

Part C fraud and abuse incidents to other entities for further investigation 

in 2009. MA organizations referred these Part C incidents to more than 
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 13

12 different entities, including State insurance commissioners, OIG, and 

MEDICs. In contrast, 53 organizations that identified 35,779 potential 

Part C incidents in 2009 did not refer any incidents to other entities. 

Fifty-six MA organizations made 927 referrals of potential Part D fraud 

and abuse incidents they identified in 2009 to other entities for further 

investigation. Most referred incidents were directed to MEDICs, DOJ, 

and State and local law enforcement agencies. Fifteen of these 

organizations each referred just one potential Part D incident. 

Fifty-two MA organizations identified 7,732 Part D incidents in 2009, but 

did not make any referrals for further investigation.
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 14

RECOMMENDATIONS

MA organizations’ efforts to identify and address potential fraud and abuse 

are crucial to protecting the integrity of the MA program. These 

organizations are required to have compliance plans in place that include 

programs to detect, correct, and prevent fraudulent and abusive activity. 

CMS, however, does not require MA organizations to report, nor does it 

routinely review, the results of organizations’ efforts to identify and 

respond to potential fraud and abuse. Our review reveals that, in 2009, the 

efforts of 19 percent of MA organizations did not yield any potential 

Part C and Part D fraud and abuse incidents. Another 21 percent of 

organizations did not identify potential fraud and abuse in either Part C or 

Part D. These findings build upon the results of a prior OIG review that 

revealed that more than one-quarter of stand-alone Part D plan sponsors 

did not identify any potential fraud and abuse in 2007.

The volume of potential fraud and abuse incidents identified by MA 

organizations varied significantly. Eight organizations identified just 

1 incident in 2009, and 1 organization identified over 1 million potential 

Part C and Part D fraud and abuse incidents. Also, not all organizations 

that identified incidents conducted inquiries, initiated corrective actions, or 

referred incidents to outside entities for further investigation.

These findings indicate that not all MA organizations have a common 

understanding of key fraud and abuse program terms, including 

“incident,” “inquiry,” and “corrective action.” In a 1998 report, OIG 

identified similar issues relating to Medicare benefit integrity contractors’ 

definitions of key fraud and abuse terms. OIG found that variation in the 

meaning of key words and terms across these contractors hindered CMS’s 

ability to interpret their data and measure their performance.

In addition, our findings raise questions about whether all MA 

organizations are implementing their programs to detect and address 

potential fraud and abuse effectively.

Therefore, we recommend that CMS:

Ensure that MA organizations are implementing programs to 

detect, correct, and prevent fraud, waste, and abuse, as 

required in their compliance plans, so that all potential Part C 

and Part D fraud and abuse incidents are identified

We recommend that CMS focus on the 33 MA organizations that did not 

identify any potential fraud and abuse incidents related to their Part C 

health benefits and Part D drug benefits in 2009 and the 35 MA 

organizations that identified incidents related only to Part C or only to 

Part D.
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 15

Review MA organizations to determine why certain 

organizations reported especially high or low volumes of 

potential Part C and Part D fraud and abuse incidents and 

inquiries 

From this review, CMS would be able to determine the extent to which the 

extreme variation in reporting is due to (1) the lack of a common 

understanding across MA organizations of key fraud and abuse terms; or 

(2) the quality of their programs to detect, correct, and prevent fraud, 

waste, and abuse.

Develop specific guidance for MA organizations on defining 

potential Part C and Part D fraud and abuse incidents and 

inquiries

CMS manuals and documents provide basic definitions of fraud and abuse 

incidents and inquiries. However, our review indicates that some MA 

organizations defined potential fraud and abuse incidents and inquiries 

quite differently. These differences may have contributed to the wide 

variation in the volume of incidents and inquiries MA organizations 

reported for 2009. Clear and specific guidance regarding fraud and abuse 

terms would promote common understanding across MA organizations 

and help CMS to ensure comparability of fraud and abuse information 

across MA organizations.

Require MA organizations to report to CMS aggregate data 

related to their Part C and Part D antifraud, waste, and abuse 

activities

MA organizations have had the option to voluntarily report aggregate 

fraud and abuse activity data to CMS for their Part D plans since 2010. 

CMS should require MA organizations to report this information for both 

their Part C and Part D plans. CMS should use these data to target audits 

and evaluate the effectiveness of MA organizations’ fraud, waste, and 

abuse programs.

Ensure that all MA organizations are responding appropriately 

to potential fraud and abuse incidents 

As required by 42 CFR § 422.503(b)(4)(vi)(G), MA organizations must 

conduct timely, reasonable inquiries and take appropriate corrective 

actions in response to evidence of potential fraud and abuse. CMS may 

want to focus on the MA organizations that identified potential fraud and 

abuse incidents in 2009, but did not initiate any inquiries or take any 

corrective actions.
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 16

Require MA organizations to refer potential fraud and abuse 

incidents that may warrant further investigation to CMS or 

other appropriate entities 

Current regulations stipulate only that MA organizations “should have 

procedures to voluntarily self-report potential fraud or misconduct related 

to the MA program to CMS or its designee.”

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

In its comments on the draft report, CMS stated that MA organizations’ 

efforts to identify and address potential fraud and abuse are crucial to 

protecting the integrity of the MA program. It concurred with our first 

recommendation, to ensure that MA organizations are implementing their 

programs to identify potential fraud and abuse. CMS stated that it 

conducted 33 compliance plan audits in 2010 and that its annual audit 

evaluation process uses various data to identify MA organizations that 

present risks to the Part C and Part D programs. In addition, CMS noted 

that it plans to provide an updated manual chapter to MA organizations

with instructions and guidance on how to implement a program to detect, 

correct, identify, and prevent fraud, waste, and abuse.

CMS did not concur with our second recommendation, to review MA 

organizations to determine why certain organizations reported especially 

high or low volumes of potential fraud and abuse. CMS stated that, based 

on enhancements it has made to compliance plan audits and the age of the 

data used in OIG’s report, it does not believe it is necessary to contact the 

MA organizations identified in the OIG study. 

CMS performed audits of 27 MA organizations’ compliance plans for the 

period 2006 through 2010. OIG agrees that these audits can provide 

valuable information about the performance of the individual 

organizations selected for review. However, the audits focused on a small 

number of organizations and have not provided CMS with the information 

it needs to identify trends and aberrancies and compare organizations’ 

antifraud efforts across the MA program. Until CMS requires MA 

reporting of both Part C and Part D antifraud activities, the 2009 data 

collected by OIG are the only comprehensive source of this information 

for MA organizations. Therefore, OIG continues to recommend that CMS 

review the data and determine the reasons for such significant differences 

in the volume of fraud identification across MA organizations. This 

analysis could help CMS to determine whether differences are related to 

the quality of organizations’ antifraud programs or to the lack of common 

understanding across organizations of key fraud and abuse terms. 
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 17

CMS concurred with our third recommendation, to develop specific 

guidance for MA organizations on defining potential fraud and abuse 

incidents and inquiries. CMS noted that it is developing a Part C and

Part D fraud handbook for sponsoring organizations about detecting and 

preventing fraud, to be available in fall 2012. CMS further stated that it 

has added more detailed regulatory requirements for the seven compliance 

program elements, effective January 1, 2011, including a specific 

requirement that MA organizations have an “effective” compliance 

program.

CMS concurred in part with our fourth recommendation, that it require 

MA organizations to report aggregate data related to their Part C and 

Part D antifraud, waste, and abuse activities. CMS stated that compliance 

program audit results may provide an indication of MA organizations’ 

overall performance and allow CMS to target guidance and education. 

CMS also stated that it will explore the option of placing an additional 

burden on MA organizations by requiring them to report aggregate data on 

their antifraud activities. 

While CMS’s current audit approach is made up of assessments of the 

performance of individual MA organizations, we continue to recommend 

that CMS adopt a broader approach to review MA organizations’ antifraud 

efforts. To assess the MA program as a whole, CMS must collect,

examine, and compare data from all MA organizations on fraud and abuse 

incidents, inquiries, corrective actions, and referrals. Requiring all MA 

organizations to report data on their antifraud activities would enable CMS 

to explore the data in detail to identify potentially aberrant organizations

and thereby enhance its ability to target audits and evaluate the 

effectiveness of antifraud activities across the entire MA program.

CMS concurred with our fifth recommendation, to ensure that all MA 

organizations respond appropriately to potential fraud and abuse. CMS 

stated that, in addition to publishing the updated manual chapter, it will 

consider developing outreach and education based on lessons it has 

learned from completed audits to improve organizations’ performance in 

responding to potential fraud and abuse incidents.

CMS concurred in part with our sixth recommendation, to require MA 

organizations to refer potential fraud and abuse incidents that warrant 

further investigation to CMS or other entities. CMS stated that it does not 

have the regulatory authority to require MA organizations to self-report 

fraud and abuse incidents. However, CMS noted that it will explore this 

option and continue to encourage MA organizations through guidance and 

education to voluntarily self-report fraud and abuse incidents. 
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 18

OIG acknowledges that current regulations do not require MA 

organizations to self-report potential fraud and abuse incidents. However, 

CMS has the authority to amend the regulations to require that MA 

organizations report potential fraud and abuse incidents that warrant 

further investigation to appropriate entities. We also note that CMS stated 

in the preamble to a December 5, 2007, Final Rule that “although we have 

decided not to finalize the mandatory self-reporting provisions that we 

proposed, CMS remains committed to adopting a mandatory self-reporting 

requirement.”

The full text of CMS’s comments is provided in Appendix F.
OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 19

APPENDIX A

Potential Fraud and Abuse Incidents, Inquiries, Corrective Actions, and Referrals for 

All Medicare Advantage Organizations in 2009

Table A-1: Potential Fraud and Abuse Incidents and Inquiries Reported by 

Medicare Advantage Organizations in 2009

Top Three MA Organizations Remaining MA Organizations

Potential 

Fraud and 

Abuse 

Incidents 

Identified in 

2009

Number of 

Inquiries 

Conducted 

in 2009

Ratio of 

Inquiries to 

Incidents

Potential 

Fraud and 

Abuse 

Incidents 

Identified in 

2009

Number of 

Inquiries 

Conducted in 

2009

Ratio of 

Inquiries to 

Incidents

Part C 1,210,344 1,010,234 83% 61,188 24,928 41%

Part D 147,840 145,830 99% 12,311 7,277 59%

 Total 1,358,184 1,156,064 85% 73,499 32,205 44%

Source: Office of Inspector General (OIG) analysis of Medicare Advantage (MA) organizations’ survey responses.

Table A-2: Potential Fraud and Abuse Incidents and Corrective Actions Reported 

by MA Organizations in 2009

Top Three MA Organizations Remaining MA Organizations

Potential 

Fraud and 

Abuse 

Incidents 

Identified in 

2009

Number of 

Corrective 

Actions 

Initiated in 

2009

Ratio of 

Corrective 

Actions to 

Incidents

Potential 

Fraud and 

Abuse 

Incidents 

Identified in 

2009

Number of 

Corrective 

Actions 

Initiated in 

2009

Ratio of 

Corrective 

Actions to 

Incidents

Part C 1,210,344 1,010,235 83% 61,188 15,248 25%

Part D 147,840 103,769 70% 12,311 4,811 39%

 Total 1,358,184 1,114,004 82% 73,499 20,059 27%

Source: OIG analysis of MA organizations’ survey responses.

Table A-3: Potential Fraud and Abuse Incidents and Referrals to Other Entities 

Reported by MA Organizations in 2009

Top Three MA Organizations Remaining MA Organizations

Potential 

Fraud and 

Abuse 

Incidents 

Identified in 

2009

Number of 

Referrals 

Sent in 2009

Ratio of 

Referrals 

Sent to 

Incidents

Potential 

Fraud and 

Abuse 

Incidents 

Identified in 

2009

Number of 

Referrals Sent 

in 2009

Ratio of 

Referrals 

Sent to 

Incidents

Part C 1,210,344 39 <.01% 61,188 1,689 3%

Part D 147,840 1 <.01% 12,311 927 8%

 Total 1,358,184 40 <.01% 73,499 2,616 4%

Source: OIG analysis of MA organizations’ survey responses.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 20

APPENDIX B

Fraud and Abuse Activities by MA Organization for 2009

This table provides the numbers of potential fraud and abuse incidents identified, inquiries 

conducted, corrective actions initiated, and incidents referred for each of the 170 Medicare 

Advantage (MA) organizations in our review. The data are sorted by the total number of 

incidents each MA organization identified.

Table B-1: Fraud and Abuse Activities by MA Organization for 2009

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

178 Over 250,000

Part C 1,010,233 1,010,233 1,010,233 38

Part D 100,909 100,909 100,907 1 

Subtotal 1,111,142 1,111,142 1,111,140 39

34 20,000 to 49,999

Part C 200,111 1 2 1 

Part D 2,377 377 128 0

Subtotal 202,488 378 130 1 

112 5,000 to 19,999

Part C 0 * * *

Part D 44,554 44,544 2,734 0 

Subtotal 44,554 44,544 2,734 0 

74 20,000 to 49,999

Part C 14,558 0 7,047 0

Part D 866 866 890 0 

Subtotal 15,424 866 7,937 0 

36 20,000 to 49,999

Part C 10,675 2 2 0 

Part D 1,837 0 0 0 

Subtotal 12,512 2 2 0 

174 Over 250,000

Part C 7,478 7,381 1,898 91

Part D 712 631 102 45

Subtotal 8,190 8,012 2,000 136

57 1,000 to 4,999

Part C 7,787 11 6 1 

Part D 154 0 0 0

Subtotal 7,941 11 6 1 

14 5,000 to 19,999

Part C 5,123 5,123 0 0 

Part D 25 25 0 1 

Subtotal 5,148 5,148 0 1 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 21

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

58 1,000 to 4,999

Part C 3,053 669 669 0 

Part D 26 26 26 0 

Subtotal 3,079 695 695 0 

169 Over 250,000

Part C 2,251 2,251 1,236 432

Part D 303 303 131 266

Subtotal 2,554 2,554 1,367 698

33 Over 250,000

Part C 2,154 2,154 794 20

Part D 51 51 44 6 

Subtotal 2,205 2,205 838 26

143 5,000 to 19,999

Part C 9 9 14 1 

Part D 2,040 2,040 2,043 1 

Subtotal 2,049 2,049 2,057 2 

61 5,000 to 19,999

Part C 42 32 20 1 

Part D 1,532 101 101 0 

Subtotal 1,574 133 121 1 

62 50,000 to 250,000

Part C 1,360 1,339 49 1 

Part D 75 75 0 0 

Subtotal 1,435 1,414 49 1 

24 5,000 to 19,999

Part C 843 843 843 0 

Part D 1 1 0 0 

Subtotal 844 844 843 0 

98 20,000 to 49,999

Part C 123 123 102 0 

Part D 714 714 247 0 

Subtotal 837 837 349 0 

70 5,000 to 19,999

Part C 13 13 3 7 

Part D 799 0 88 0 

Subtotal 812 13 91 7 

7 20,000 to 49,999

Part C 508 508 10 1 

Part D 226 0 0 0 

Subtotal 734 508 10 1 

119 50,000 to 250,000

Part C 438 438 80 4 

Part D 289 289 13 2 

Subtotal 727 727 93 6 

87 Over 250,000

Part C 438 438 11 0 

Part D 98 98 0 17

Subtotal 536 536 11 17

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 22

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

81 5,000 to 19,999

Part C 1 1 0 0 

Part D 374 374 305 0 

Subtotal 375 375 305 0 

176 50,000 to 250,000

Part C 310 310 127 78

Part D 54 54 30 14

Subtotal 364 364 157 92

95 50,000 to 250,000

Part C 263 263 86 0 

Part D 66 66 1 22

Subtotal 329 329 87 22

76 Over 250,000

Part C 291 291 267 1 

Part D 35 35 28 3 

Subtotal 326 326 295 4 

148 50,000 to 250,000

Part C 270 136 5 50

Part D 1 1 0 1 

Subtotal 271 137 5 51

16 50,000 to 250,000

Part C 213 213 111 5 

Part D 49 159 49 3 

Subtotal 262 372 160 8 

20 20,000 to 49,999

Part C 186 179 179 119

Part D 21 21 26 18

Subtotal 207 200 205 137

21 1,000 to 4,999

Part C 69 69 15 0 

Part D 104 104 25 0 

Subtotal 173 173 40 0 

72 1,000 to 4,999

Part C 8 20 18 1 

Part D 163 163 26 0 

Subtotal 171 183 44 1 

25 5,000 to 19,999

Part C 16 16 1 0 

Part D 153 0 0 0 

Subtotal 169 16 1 0 

47 50,000 to 250,000

Part C 87 87 71 3 

Part D 79 79 22 3 

Subtotal 166 166 93 6 

40 1,000 to 4,999

Part C 140 123 3 0 

Part D 24 0 0 0 

Subtotal 164 123 3 0 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 23

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number

of Incidents 

Referred to 

Other Entities1

173 5,000 to 19,999

Part C 155 74 29 20

Part D 0 * * *

Subtotal 155 74 29 20

51 50,000 to 250,000

Part C 143 166 76 7 

Part D 1 1 0 0 

Subtotal 144 167 76 7 

78 50,000 to 250,000

Part C 29 15 0 7 

Part D 107 39 0 22

Subtotal 136 54 0 29

123 5,000 to 19,999

Part C 121 6 2 1 

Part D 9 0 9 0 

Subtotal 130 6 11 1 

144 1,000 to 4,999

Part C 124 109 23 1 

Part D 2 2 2 0 

Subtotal 126 111 25 1 

29 50,000 to 250,000

Part C 1 1 1 0 

Part D 124 124 2 98

Subtotal 125 125 3 98

137 1,000 to 4,999

Part C 2 2 0 1 

Part D 116 35 3 0 

Subtotal 118 37 3 1 

38 Over 250,000

Part C 76 68 77 41

Part D 41 33 62 10

Subtotal 117 101 139 51

52 50,000 to 250,000

Part C 34 34 29 5 

Part D 79 81 73 8 

Subtotal 113 115 102 13

179 50,000 to 250,000

Part C 50 51 45 43

Part D 58 58 1 32

Subtotal 108 109 46 75

180 5,000 to 19,999

Part C 106 24 24 5 

Part D 1 1 1 0 

Subtotal 107 25 25 5 

75 50,000 to 250,000

Part C 89 89 68 12

Part D 15 15 11 7 

Subtotal 104 104 79 19

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 24

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

69 Over 250,000

Part C 81 79 98 28

Part D 22 20 14 2 

Subtotal 103 99 112 30

73 20,000 to 49,999

Part C 13 13 10 1 

Part D 85 85 107 0 

Subtotal 98 98 117 1 

147 50,000 to 250,000

Part C 82 58 90 7 

Part D 13 0 0 13

Subtotal 95 58 90 20

1 50,000 to 250,000

Part C 70 70 278 1 

Part D 24 24 54 0 

Subtotal 94 94 332 1 

121 50,000 to 250,000

Part C 88 88 83 72

Part D 5 5 4 2 

Subtotal 93 93 87 74

107 1,000 to 4,999

Part C 72 72 9 1 

Part D 21 21 1 0 

Subtotal 93 93 10 1 

71 50,000 to 250,000

Part C 64 55 49 13

Part D 28 28 0 25

Subtotal 92 83 49 38

106 50,000 to 250,000

Part C 65 6 8 6 

Part D 24 3 3 9 

Subtotal 89 9 11 15

120 20,000 to 49,999

Part C 82 67 67 1 

Part D 5 4 2 1 

Subtotal 87 71 69 2 

124 5,000 to 19,999

Part C 66 66 12 0 

Part D 16 16 3 0 

Subtotal 82 82 15 0 

118 5,000 to 19,999

Part C 0 * * *

Part D 76 76 48 0 

Subtotal 76 76 48 0 

122 1,000 to 4,999

Part C 74 74 74 72

Part D 1 1 0 0 

Subtotal 75 75 74 72

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 25

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

64 20,000 to 49,999

Part C 7 7 20 7 

Part D 60 60 20 0 

Subtotal 67 67 40 7 

108 5,000 to 19,999

Part C 51 49 53 1 

Part D 13 7 7 3 

Subtotal 64 56 60 4 

86 50,000 to 250,000

Part C 7 0 1 0 

Part D 57 0 0 1 

Subtotal 64 0 1 1 

9 5,000 to 19,999

Part C 0 * * *

Part D 56 18 18 0 

Subtotal 56 18 18 0 

53 50,000 to 250,000

Part C 37 23 22 0 

Part D 18 18 2 0 

Subtotal 55 41 24 0 

19 5,000 to 19,999

Part C 51 0 0 0 

Part D 0 * * *

Subtotal 51 0 0 0 

89 Fewer than 1,000

Part C 0 * * *

Part D 48 0 0 0 

Subtotal 48 0 0 0 

31 Over 250,000

Part C 37 37 2 1 

Part D 8 8 16 4 

Subtotal 45 45 18 5 

41 5,000 to 19,999

Part C 36 36 13 0 

Part D 9 9 1 4 

Subtotal 45 45 14 4 

42 Fewer than 1,000

Part C 0 * * *

Part D 40 40 0 0 

Subtotal 40 40 0 0 

90 20,000 to 49,999

Part C 31 31 3 18

Part D 8 8 0 6 

Subtotal 39 39 3 24

11 20,000 to 49,999

Part C 29 31 3 4 

Part D 9 13 1 1 

Subtotal 38 44 4 5 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 26

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

162 5,000 to 19,999

Part C 1 1 0 0 

Part D 37 11 36 11

Subtotal 38 12 36 11

167 5,000 to 19,999

Part C 36 6 13 0 

Part D NA2 * * *

Subtotal 36 6 13 0 

102 20,000 to 49,999

Part C 32 27 48 0 

Part D 3 2 4 0 

Subtotal 35 29 52 0 

12 50,000 to 250,000

Part C 13 13 13 5 

Part D 19 19 19 4 

Subtotal 32 32 32 9 

117 20,000 to 49,999

Part C 14 8 12 1 

Part D 18 18 10 6 

Subtotal 32 26 22 7 

5 50,000 to 250,000

Part C 22 22 22 0 

Part D 7 7 7 7 

Subtotal 29 29 29 7 

132 5,000 to 19,999

Part C 22 22 15 1 

Part D 7 7 1 0 

Subtotal 29 29 16 1 

22 20,000 to 49,999

Part C 22 22 5 1 

Part D 2 2 2 2 

Subtotal 24 24 7 3 

136 1,000 to 4,999

Part C 7 7 0 0 

Part D 15 0 0 0 

Subtotal 22 7 0 0 

146 1,000 to 4,999

Part C 0 * * *

Part D 22 0 0 0 

Subtotal 22 0 0 0 

157 1,000 to 4,999

Part C 20 20 2 0 

Part D 1 1 0 0 

Subtotal 21 21 2 0 

100 20,000 to 49,999

Part C 18 3 3 1 

Part D 3 0 0 0 

Subtotal 21 3 3 1 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 27

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 1 Other Entities

Part C 18 22 22 17

168 20,000 to 49,999 Part D 2 4 4 2 

Subtotal 20 26 26 19

Part C 18 18 28 3 

116 20,000 to 49,999 Part D 2 2 1 2 

Subtotal 20 20 29 5 

Part C 11 11 11 1 

88 50,000 to 250,000 Part D 8 8 1 7 

Subtotal 19 19 12 8 

Part C 16 16 4 0 

160 20,000 to 49,999 Part D 2 2 0 0 

Subtotal 18 18 4 0 

Part C 2 2 0 0 

93 1,000 to 4,999 Part D 16 0 16 0 

Subtotal 18 2 16 0 

Part C 14 14 10 0 

92 1,000 to 4,999 Part D 1 1 0 0 

Subtotal 15 15 10 0 

Part C 12 12 6 7 

154 Fewer than 1,000 Part D 3 3 2 2 

Subtotal 15 15 8 9 

Part C 14 14 2 0 

164 5,000 to 19,999 Part D 1 1 0 0 

Subtotal 15 15 2 0 

Part C 12 12 5 2 

111 5,000 to 19,999 Part D 2 2 4 2 

Subtotal 14 14 9 4 

Part C 14 14 7 4 

115 20,000 to 49,999 Part D 0 * * *

Subtotal 14 14 7 4 

Part C 12 7 2 0 

6 5,000 to 19,999 Part D 1 1 1 0 

Subtotal 13 8 3 0 

Part C 12 0 0 0 

126 50,000 to 250,000 Part D 0 * * *

Subtotal 12 0 0 0 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 28

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 1 Other Entities

67 5,000 to 19,999

Part C

Part D

12

3 Unavailable

0 

*

0 

*

0 

*

Subtotal 12 0 0 0 

Part C 1 1 0 1 

37 1,000 to 4,999 Part D 9 9 0 0 

Subtotal 10 10 0 1 

Part C 5 5 0 0 

113 1,000 to 4,999 Part D 5 5 0 0 

Subtotal 10 10 0 0 

Part C 10 0 0 0 

48 5,000 to 19,999 Part D 0 * * *

Subtotal 10 0 0 0 

Part C 2 2 0 0 

170 1,000 to 4,999 Part D 7 7 6 0 

Subtotal 9 9 6 0 

Part C 7 7 7 1 

138 20,000 to 49,999 Part D 1 1 1 1 

Subtotal 8 8 8 2 

Part C 3 3 0 3 

140 5,000 to 19,999 Part D 5 5 0 4 

Subtotal 8 8 0 7 

Part C 7 0 0 7 

46 5,000 to 19,999 Part D 1 1 2 1 

Subtotal 8 1 2 8 

Part C 7 0 0 0 

129 20,000 to 49,999 Part D 1 1 0 1 

Subtotal 8 1 0 1 

Part C 4 0 0 0 

171 1,000 to 4,999 Part D 4 0 0 0 

Subtotal 8 0 0 0 

18 Fewer than 

1,000

Part C

Part D

8 

0

0 

*

0 

*

0 

*

Subtotal 8 0 0 0 

Part C 3 3 4 3 

159 20,000 to 49,999 Part D 4 4 11 0 

Subtotal 7 7 15 3 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 29

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 1 Other Entities

Part C 7 7 12 0 

2 5,000 to 19,999 Part D 0 * * *

Subtotal 7 7 12 0 

Part C 5 0 0 1 

130 20,000 to 49,999 Part D 2 0 0 0 

Subtotal 7 0 0 1 

Part C 2 2 1 0 

96 20,000 to 49,999 Part D 4 4 4 4 

Subtotal 6 6 5 4 

Part C 6 6 3 0 

35 1,000 to 4,999 Part D 0 * * *

Subtotal 6 6 3 0 

Part C 4 3 3 3 

135 1,000 to 4,999 Part D 2 2 2 1 

Subtotal 6 5 5 4 

Part C 0 * * *

45 20,000 to 49,999 Part D 5 5 10 5 

Subtotal 5 5 10 5 

Part C 5 5 5 1 

101 1,000 to 4,999 Part D 0 * * *

Subtotal 5 5 5 1 

Part C 5 5 5 0 

99 1,000 to 4,999 Part D 0 * * *

Subtotal 5 5 5 0 

Part C 4 3 3 1 

172 1,000 to 4,999 Part D 1 1 0 1 

Subtotal 5 4 3 2 

Part C 2 1 1 2 

141 20,000 to 49,999 Part D 3 3 1 3 

Subtotal 5 4 2 5 

97 Fewer than 

1,000

Part C

Part D

4 

0

4 

*

3 

*

2 

*

Subtotal 4 4 3 2 

49 Fewer than 

1,000

Part C

Part D

3 

1

3 

1 

1 

1 

2 

1 

Subtotal 4 4 2 3 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 30

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other Entities1

103 1,000 to 4,999

Part C 4 4 2 0 

Part D 0 * * *

Subtotal 4 4 2 0 

23 1,000 to 4,999

Part C 4 3 10 3 

Part D 0 * * *

Subtotal 4 3 10 3 

150 1,000 to 4,999

Part C 3 6 0 0 

Part D 0 * * *

Subtotal 3 6 0 0 

66 20,000 to 49,999

Part C 3 3 3 0 

Part D 0 * * *

Subtotal 3 3 3 0 

104 5,000 to 19,999

Part C 1 1 0 1 

Part D 2 2 0 2 

Subtotal 3 3 0 3 

156 5,000 to 19,999

Part C 2 2 0 0 

Part D 1 1 0 0 

Subtotal 3 3 0 0 

56 1,000 to 4,999

Part C 0 * * *

Part D 3 2 2 1 

Subtotal 3 2 2 1 

79 Fewer than 1,000

Part C 0 * * *

Part D 3 0 0 0 

Subtotal 3 0 0 0 

50 1,000 to 4,999

Part C 2 2 2 0 

Part D 0 * * *

Subtotal 2 2 2 0 

131 1,000 to 4,999

Part C 2 2 2 0 

Part D 0 * * *

Subtotal 2 2 2 0 

158 5,000 to 19,999

Part C 2 2 1 0 

Part D 0 * * *

Subtotal 2 2 1 0 

83 50,000 to 250,000

Part C Unavailable4 * * *

Part D 2 2 0 0 

Subtotal 2 2 0 0 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 31

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 1 Other Entities

Part C 1 1 1 0 

127 1,000 to 4,999 Part D 1 0 0 1 

Subtotal 2 1 1 1 

Part C 1 1 5 0 

30 5,000 to 19,999 Part D 0 * * *

Subtotal 1 1 5 0 

Part C 1 1 5 0 

177 5,000 to 19,999 Part D 0 * * * 

Subtotal 1 1 5 0 

Part C 1 1 2 1 

125 20,000 to 49,999 Part D 0 * * * 

Subtotal 1 1 2 1 

Part C 0 * * *

114 1,000 to 4,999 Part D 1 1 1 1 

Subtotal 1 1 1 1 

Part C 1 1 1 0 

165 5,000 to 19,999 Part D 0 * * *

Subtotal 1 1 1 0 

Part C 1 1 0 1 

94 5,000 to 19,999 Part D 0 * * *

Subtotal 1 1 0 1 

Part C 1 1 0 0 

152 5,000 to 19,999 Part D 0 * * *

Subtotal 1 1 0 0 

Part C 0 * * *

28 1,000 to 4,999 Part D 1 0 0 0 

Subtotal 1 0 0 0 

Part C 0 * * *

17 20,000 to 49,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

134 20,000 to 49,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

8 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 32

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 1 Other Entities

Part C 0 * * *

10 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

15 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

39 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

85 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

109 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

110 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

142 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

151 5,000 to 19,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

4 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

26 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

59 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

60 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 33

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 1 Other Entities

Part C 0 * * *

77 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

91 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

105 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

128 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

145 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

153 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

161 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

163 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

Part C 0 * * *

166 1,000 to 4,999 Part D 0 * * *

Subtotal 0 * * *

13 Fewer than 

1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

27 Fewer than 

1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

32 Fewer than 

1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 34

Table B-1: Fraud and Abuse Activities by MA Organization for 2009 (Continued)

MA 

Organization 

Identifier

Enrollment 

Category

Total Number 

of Potential 

Fraud and 

Abuse 

Incidents 

Identified

Total Number 

of Inquiries 

Conducted

Total Number 

of Corrective 

Actions 

Initiated

Total Number 

of Incidents 

Referred to 

Other 1 Entities

55 Fewer than 1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

68 Fewer than 1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

82 Fewer than 1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

133 Fewer than 1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

139 Fewer than 1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

155 Fewer than 1,000

Part C

Part D

0 

0 

*

*

*

*

*

*

Subtotal 0 * * *

 Part C Total 1,271,532 1,035,162 1,025,483 1,307

 Part D Total 160,151 153,107 108,580 723

 Grand Total 1,431,683 1,188,269 1,134,063 2,030

Source: Office of Inspector General analysis of MA organizations’ survey responses and Centers for Medicare & Medicaid Services enrollment 

data.

*These MA organizations did not identify any potential fraud and abuse incidents in 2009. 1

This column represents the number of incidents referred to other entities, not the number of referrals. One potential fraud and abuse incident 

may be referred to multiple entities for further investigation.

2

MA organization 167 did not operate any Medicare Advantage Prescription Drug plans in 2009.

3

MA organization 67 could not provide information about potential Part D fraud and abuse incidents separate from incidents related to its other 

lines of business.

4

MA organization 83 could not provide information about potential Part C fraud and abuse incidents separate from incidents related to its other 

lines of business.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 35

APPENDIX C

Types of Potential Part C and Part D Fraud and Abuse Identified by Medicare Advantage 

Organizations in 2009 

The examples cited in Tables C-1 and C-2 were derived from Chapter 9 of the Centers for 

Medicare & Medicaid Services’ (CMS) Prescription Drug Benefit Manual; CMS’s Guidelines for 

Addressing Fraud and Abuse in Medicaid Managed Care, issued October 2000; and Medicare 

Advantage (MA) organizations’ responses to our survey. 

Table C-1: Types of Potential Part C Fraud and Abuse Identified by MA Organizations in 2009

Type of 

Abuse

Fraud and Number of Incidents Examples

Top Three MA 

Organizations

Remaining MA 

Organizations

Improper coding 1,145,196 39,451

• By using the wrong billing code or separately billing for codes that 

could be included in a larger, more inclusive set of codes, the health 

care provider is reimbursed at a higher rate than if the correct billing 

codes were used and the services were billed together.

Marketing schemes 45 8,003

• Plan sponsor, first-tier entity, or downstream entity violated Medicare 

marketing guidelines or other Federal or State laws, rules, and 

regulations to improperly enroll beneficiaries in an MA plan. 

Billing for ineligible 

consumers 0 5,521 • Misrepresentation of beneficiary's personal identity or eligibility 

information, medical condition, or plan enrollment information. 

Services never 

rendered 0 3,522 • Provider submits claims or encounter data for 

never provided to beneficiary.

services that were 

Failure to provide 

medically necessary 

services

0 1,236

• Plan sponsor, health care provider, or other entity fails to provide 

medically necessary items or services that it is required to provide 

under law or under the contract, and that failure adversely affects or 

substantially likely to affect the beneficiary. 

is 

Double billing or 

balance billing 65,056 963

• The provider receives more than one payment for the same service 

and keeps the money, or bills the beneficiary directly for the total 

amount of the bill including the amount of the charge that the provider 

has agreed to write off after the MA organization has paid.

Suspect billing 0 387 •

•

Questionable or suspicious billing practices. 

Overutilization.

Attempts to steal 

beneficiary 

identity/money

38 338

•

•

Individual or organization poses as part of Medicare or Social Security 

with intent to steal beneficiary's identity or money.

Individual uses/steals another person's Medicare or MA card. 

Overcharging 

beneficiary 0 316 • Overcharging beneficiary for improper coinsurance or premiums.

Billing errors/issues 0 245

•

•

•

•

•

•

•

Member complaints of improper provider billing. 

Billing incorrect carrier. 

Other insurance primary. 

Billing wrong contract number. 

Failure to disclose overpayment. 

Charges exceed contract. 

Entity overcharging the MA plan. 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 36

Table C-1: Types of Potential Part C Fraud and 

(Continued)

Abuse Identified by MA Organizations in 2009 

Type of 

Abuse

Fraud and Number of Incidents Examples

Top Three MA 

Organizations

Remaining MA 

Organizations

Adverse selection 2 212 • Selecting/denying beneficiaries based on illness 

discriminatory factors. 

profile or other 

Falsification of health 

care provider credentials 0 210

• This can occur either at the MA organization or downstream. 

Falsification of provider credentials may result in improper 

payment for the services of a provider who does not meet 

required professional qualifications. 

Request for information 0 104 •

•

Law enforcement request for information. 

Request for assistance from external entity.

Improper cost reporting or 

cost shifting 0 102 • Providers submit inflated reports of patient traffic and treatment 

costs to induce payers to increase future per-patient payments. 

Enrollment/disenrollment 

issue 5 96

•

•

•

•

Questionable enrollment. 

Improper disenrollment or enrollment activity. 

Attempted enrollment without beneficiary approval. 

Falsified enrollment information.

Outside scope of practice 0 70 • Physicians provide services outside their scope of practice. 

Medical necessity or 

appropriateness issue 0 44

•

•

Member complaints of testing being ordered by physician that the 

member did not feel was necessary. 

Provider billing for unnecessary services. 

Inducements, kickbacks, 

bribes, or tying 

agreements

0 38

•

•

•

Inappropriate discounts, support services, educational grants, or 

research funding. 

Improper entertainment or business courtesies. 

The MA organization may subcontract with entities that have 

expertise in a particular area. If the subcontractor requires the 

MA organization to contract with other entities as a condition for 

the subcontractor to provide services, the MA organization could 

incur inflated costs. 

Investigations 0 36 •

•

Provider indicted for Medicare fraud. 

Provider under State/Federal investigation.

Unauthorized services or 

provider 0 33

•

•

•

•

•

•

•

Patient seen after termination. 

Fraudulent billing for unauthorized poststabilization inpatient 

services at several noncontracted hospitals that are part of a 

commonly owned chain. 

Provider's license was revoked. 

Provider referring lab services to a nonparticipating vendor. 

Billing for items/tests not ordered or covered. 

Out of geographical service area.

Noncredentialed provider—incorrect reporting of rendering 

provider. 

Falsification of financial 

solvency 0 26 • A first-tier or downstream entity can purport to have sufficient 

assets to cover claims when, in fact, it lacks financial solvency. 

Falsification of records or 

other data 0 25

•

•

•

•

Falsification of medical record or dates of service. 

Member falsification of a medical referral.

Forged physician’s signature. 

Forged or altered durable medical equipment (DME) prescription. 

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 37

Table C-1: Types of Potential Part C Fraud and Abuse Identified by MA Organizations in 2009 

(Continued)

Type of Fraud and 

Abuse Number of Incidents Examples

Top Three MA 

Organizations

Remaining MA 

Organizations

Beneficiary abuse of 

benefits 0 18

• Member sold DME to another party. 

• Fraudulent use of benefits. 

• Illegal use/sale of prescription drugs. 

• Alteration of claim by member. 

• Beneficiary, a former practicing physician, wrote a prescription for 

his own use.

Quality of care issue 0 10 • Member complaint of poor quality of products, services.

Inappropriate physician 

incentive plans 0 9 

• Under a capitated arrangement, specialists may be paid by a 

primary care physician (PCP) using a portion of the PCP’s 

capitation payment if a referral is made. Fraud can occur if the 

PCP receiving capitation payment does not reimburse specialists 

or does not refer members to specialists even if medically 

necessary.

Providing data to CMS 

that lack integrity 1 8 

• Failure to generate or report complete and accurate information 

upon which Government reimbursement depends, in whole or in 

part.

• Improperly reporting enrollment/disenrollment data to CMS to 

inflate prospective payments. 

Health Insurance 

Portability and 

Accountability Act issue

0 8 • Member received another member's identification card. 

Collusion among 

providers 1 7 • Competing providers agree on minimum fees charged and 

capitation rates accepted. 

Provider misconduct 0 7 

• Self-referral. 

• Improper soliciting by DME provider. 

• Provider requires prospective patients to sign a form prior to 

treatment that they are waiving their constitutional rights as 

provided in Article I Section 21 of the Florida Constitution. 

Drug-seeking beneficiary 0 3 • Member drug-seeking behavior. 

Possible member abuse 0 3 • Possible physical or psychological abuse of member. 

Waiver of member 

copayment 0 3 • Routinely waiving copayments and deductibles to misrepresent a 

provider’s actual charge.

Unspecified 0 139

• For these incidents, MA organizations did not specify the type of 

fraud, reported the type as miscellaneous, or provided a 

description that was too vague to categorize.

 Total 1,210,344 61,1931

Source: Office of Inspector General (OIG) analysis of MA organizations’ survey responses.

1

The total number of incidents identified was 61,188. However, five MA organizations reported two types of fraud for one potential fraud and abuse incident.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 38

Table C-2: Types of Potential Part D Fraud and Abuse Identified by MA Organizations in 2009

Type of 

Abuse

Fraud and Number of Incidents Examples

Top Three MA 

Organizations

Remaining MA 

Organizations

Inappropriate billing for 

prescriptions 104,550 2,338

•

•

•

Billing for 

Billing for 

Billing for 

brand-name drugs when generics are dispensed.

noncovered prescriptions as covered items. 

prescriptions that are never picked up.

Inappropriate prescription 

dispensing 32,110 3,764

•

•

•

Dispensing expired or adulterated prescription drugs. 

Dispensing without a prescription. 

Splitting: pharmacist or mail-order pharmacy splits prescription 

to receive additional dispensing fee.

Improper coding 8,800 1 

• Using the wrong billing code or unbundling the codes included in 

a larger, more inclusive set of codes, the health care provider is 

reimbursed at a higher rate than if the correct billing codes were 

used and the services were billed together.

Doctor shopping, 

potential drug abuse, or 

stockpiling

1,200 3,101

•

•

Beneficiary consults a number of doctors for the purpose of 

inappropriately obtaining multiple prescriptions for narcotic 

painkillers or other drugs.

Beneficiary attempts to game her/his drug coverage by obtaining 

and storing large quantities of drugs and then disenrolling.

Inappropriate prescribing 800 637

•

•

Physicians write prescriptions outside the boundaries of their 

scope of practice.

Prescriber is on the OIG exclusion list.

Marketing schemes 0 695

•

•

•

•

Misrepresentation of plan benefits. 

Misrepresentation of services. 

Member received unwanted mail from another plan. 

Competitors cold-calling Medicare Part D members, i.e., 

inappropriate soliciting. 

Overcharging beneficiary 

for prescriptions 0 492

•

•

Pharmacy asking beneficiary to pay uncompensated amounts. 

Bait-and-switch pricing, i.e., beneficiary is led to believe a drug 

will cost one price, but at point of sale is charged a higher 

amount.

Double billing or balance 

billing 377 2 

• Provider receives more than one payment for the same service 

and keeps the money, or the provider bills the beneficiary directly 

for the total amount of the bill including the amount of the charge 

that the provider has agreed to write off after the MA 

organization has paid.

Prescription errors/issues 0 310

•

•

Potential fraud scenarios referred by the beneficiaries in 

response to their monthly Part D explanation of benefits 

discrepancies: members allege they did not receive dispensed 

prescriptions which were registered under their contract. 

Missing or invalid prescriptions. 

Attempts to steal 

beneficiary identity to 

obtain prescriptions

2 190 • Individual uses another person's 

obtain prescriptions.

Medicare or insurance card to 

Inappropriate prescribing 

of controlled substances 0 182 • Physicians identified as prescribing high volume of 

substances.

controlled 

Pharmacy unresponsive 

to audit request 0 151 • Pharmacy did not respond to desk audit or in-store audit request.

continued on next page
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 39

Table C-2: Types of Potential Part D Fraud and 

(Continued)

Abuse Identified by MA Organizations in 2009 

Type of 

Abuse

Fraud and Number of Incidents Examples

Top Three MA 

Organizations

Remaining MA 

Organizations

Failure to provide 

medically necessary 

prescription drugs

0 124

• Plan sponsor or health care provider fails to provide medically 

necessary prescriptions that the organization is required to 

provide under law or under the contract, and that failure 

adversely affects or is likely to affect the beneficiary.

Forged or altered 

prescriptions or other 

documents

0 102

• Prescriptions are forged or altered by someone other than the 

prescriber or pharmacist without prescriber approval to increase 

quantity or number of refills.

Diverting prescriptions 0 46

•

•

Beneficiary obtains prescription drugs from a provider and gives 

or sells this medication to someone else. 

Inappropriate consumption or distribution of a beneficiary's 

medications by a caregiver or anyone else.

Enrollment/disenrollment 

issue 0 38 •

•

Ineligible member. 

Member had two insurance plans.

Medical necessity or 

appropriateness issue 0 20 •

•

Medical appropriateness.

Provider billing for unnecessary services. 

Theft of prescriber's 

prescription pad or 

prescriber number

0 17 • In context of 

information.

e-prescribing, includes theft of provider's login 

Request for information 0 13

•

•

•

Cases opened as a result of law enforcement request for data in 

support of investigations. 

Request for assistance from external entity. 

Request from Attorney General on member and prescribers--top 

10 by cost/volume.

Investigations 0 11 •

•

Drug Enforcement Administration

Other type of investigation.

fraud investigation. 

Inducements, kickbacks, 

or bribes 0 5 

• Prescriber is offered inappropriate discounts, support services, 

educational grants, research funding, improper entertainment, or 

business courtesies.

Providing data to CMS 

that lacks integrity 1 4 

•

•

Submitting inaccurate or incomplete Prescription Drug Event data 

or Part D plan quarterly data.

Inappropriate documentation of pricing information.

Beneficiary true out-ofpocket (TrOOP) costs or 

low-income subsidy 

manipulation 

0 3 

•

•

Incorrect TrOOP calculation that results in improper payments by 

CMS or beneficiary.

Beneficiary not receiving the low-income benefit approved by 

CMS.

Unauthorized services 

or provider 0 3 •

•

Out of service area. 

Failure to follow authorization rules. 

Suspect billing 0 1 •

•

Questionable or suspicious billing practices. 

Overutilization.

Unspecified 0 61

• For these incidents, MA organizations either did not specify the 

type of fraud, reported the type as miscellaneous, or provided a 

description that was too vague to categorize.

 Total 147,840 12,311

Source: OIG analysis of MA organizations’ survey responses.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 40

APPENDIX D

Table D-1: Types of Corrective Actions Initiated by Medicare Advantage 

Organizations in 2009

Type of Corrective Action Number of Part C Corrective 

Actions

Number of Part D Corrective 

Actions

Top Three MA1

Organizations

Remaining MA 

Organizations

Top Three MA 

Organizations

Remaining MA 

Organizations

Prepayment review 997,977 2,005 100,906 71

Collection of overpayment 11,626 2,228 2,798 3,104

Provider education 578 7,608 0 434

Disciplinary action 42 1,267 0 61

Postpayment review 1 909 65 594

Utilization monitoring 0 504 0 144

Counseling/coaching 0 288 0 3 

Termination from network 11 80 0 132

Employee training 0 64 0 17

Administrative actions 0 51 0 7 

Member education 0 32 0 1 

Policy or procedure change 0 30 0 112

Agent termination 0 30 0 1 

Agent/broker training 0 11 0 0 

Monitoring 0 10 0 0 

Referral for corrective action 

or corrective action plan 0 4 0 6 

Case management 0 1 0 21

Exclusion from 

participation

network 0 0 0 44

Other education efforts 0 0 0 37

Claim correction/reversal 0 0 0 6 

Internal referrals 0 0 0 3 

Unspecified 0 126 0 13

 Total 1,010,235 15,248 103,769 4,811

1 Medicare Advantage.

Source: Office of Inspector General analysis of MA organizations’ survey responses.
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 41

APPENDIX E 

Table E-1: Referrals to Other Entities for Further Investigation by Medicare 

Organizations in 2009

Advantage 

Entity That Received 

Referrals of Potential 

Fraud and Abuse 

Incidents

Number of Part C Referrals Number of Part D Referrals

Total 

Number of 

Referrals

Top Three MA1

Organizations

Remaining MA 

Organizations

Top Three MA 

Organizations

Remaining MA 

Organizations

Medicare drug integrity 

contractors 39 275 0 469 784

State insurance 

commissioners 0 403 0 67 470

Office of Inspector General

(OIG) 0 371 0 47 418

Department of Justice 0 187 0 158 345

State agency 0 218 0 24 242

State or local 

enforcement

law 0 74 0 137 211

Centers for Medicare & 

Medicaid Services 0 49 0 4 53

Licensing board 0 40 0 8 48

National Health Care 

Anti-Fraud Association 0 19 0 0 19

Insurance fraud bureau 0 8 0 3 11

Medicaid agency 0 10 0 0 10

State Board of Pharmacy 0 0 0 4 4 

National Association of 

Insurance Commissioners 0 1 0 0 1 

Other entities 0 34 1 6 40

 Total 39 1,689 1 927 2,656 

1 Medicare Advantage.

Source: OIG analysis of MA organizations’ survey responses.
APPENDIX F 

Agency Comments 

/,p'''''' ... Cenler. for Medicare & Medicaid Services ( DEPARTMENT OF HEALTH & HUMAN SERVICES 

,,~~\"" Administrator 

Washinglon. DC 20201 

DATE: DE': ~. 8 2011 

TO: 	 Daniel R. Levinson 


InspectoI General 


FROM: 	 Man~ Ta~nner 

Acting Adb:ljjjstrator 


SUBJECT: 	 Office ofInspector General (OIG) Draft Report: "Medicare Advantage 

Organizations' Identification of Potential Fraud and Abuse" (OEI -03-10-00310) 

The Centers for Medicare & Medicaid Services (CMS) appreciates the opportunity to review and 

comment on the Office of Inspector General (OIG) draft report entitled, "Medicare Advantage 

Organizations' Identification of Potential Fraud and Abuse." This report has multiple objectives. 

First, it seeks to determine the extent to which Medicare Advantage (MA) organizations identify 

potential fraud and abuse related to their Part C and, if applicable, Part D plans. Secondly, it 

determined the extent to which MA organizations conduct inquiries, initiate corrective actions, 

and make referrals for further investigation in response to potential fraud and abuse incidents. 

MA organizations' efforts to identify and address potential fraud and abuse are crucial to 

protecting the integrity of the MA program. These organizations are required to have 

compliance plans in place that include programs to detect, correct and prevent fraudulent and 

abusive activity. 

We appreciate the OIG's efforts in working with CMS to help ensure that vulnerabilities are 

addressed. CMS response to each of the OIG recommendations and other comments follow. 

OIG Recommendation 

Ensure that MA organizations are implementing programs to detect, correct, and prevent fraud, 

waste, and abuse, as required in their compliance plans, so that all potential Part C and Part D 

fraud and abuse incidents may be identified. 

CMS Response 

The CMS concurs with this recommendation. As noted in OIG's findings, CMS already 

conducted 33 compliance plan audits in 2010. These compliance program audits include an 

evaluation of an MA organizations' implementation and effectiveness of its programs to detect, 

correct, and prevent fraud, waste, and abuse. 

OEI-03-10-00310 Medicare Advantage Organizations' Identification of Potential Fraud and Abuse 42 
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 43

Agency Comments (Continued)
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 44

Agency Comments (Continued)
 

OEI-03-10-00310 Medicare Advantage Organizations’ Identification of Potential Fraud and Abuse 45

ACKNOWLEDGMENTS

This report was prepared under the direction of Robert A. Vito, Regional 

Inspector General for Evaluation and Inspections in the Philadelphia 

regional office, and Linda M. Ragone, Deputy Regional Inspector General. 

Amy Sernyak served as the team leader for this study. Other principal 

Office of Evaluation and Inspections staff from the Philadelphia regional 

office who contributed to the report include Conswelia McCourt and 

Joanna Bisgaier; central office staff who contributed include Kevin Farber 

and Rita M. Wurm.
 

Office of Inspector General

http://oig.hhs.gov

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is 

to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the 

health and welfare of beneficiaries served by those programs. This statutory mission is carried out through 

a nationwide network of audits, investigations, and inspections conducted by the following operating

components:

Office of Audit Services

The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with 

its own audit resources or by overseeing audit work done by others. Audits examine the performance of 

HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are 

intended to provide independent assessments of HHS programs and operations. These assessments help 

reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections

The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress, 

and the public with timely, useful, and reliable information on significant issues. These evaluations focus 

on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of 

departmental programs. To promote impact, OEI reports also present practical recommendations for 

improving program operations. 

Office of Investigations

The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and 

misconduct related to HHS programs, operations, and beneficiaries. With investigators working in all 

50 States and the District of Columbia, OI utilizes its resources by actively coordinating with the 

Department of Justice and other Federal, State, and local law enforcement authorities. The investigative 

efforts of OI often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General

The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering 

advice and opinions on HHS programs and operations and providing all legal support for OIG’s internal 

operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS 

programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In 

connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG 

renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides other 

guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement 

authorities.