Department of Health and Human Services: Review of the Management of Inspector General Operations
Published: 2003-06-10T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Janet Rehnquist became the Inspector General of the Department of Health and Human Services (HHS) in August 2001. GAO was asked to conduct a review of the Inspector General's organization and assess her leadership, independence, and judgment in carrying out the mission of the Office of Inspector General (OIG). GAO examined indicators of the OIG's productivity and compared them to the organization's past performance. GAO also determined whether employee morale has been sustained by surveying all OIG employees and comparing the results to those obtained through an identical survey administered in 2002. On March 4, 2003, the Inspector General resigned her office effective June 1, 2003. However, in this report we refer to Ms. Rehnquist as the Inspector General.
section_title: What GAO Found
paragraphs: The credibility of inspectors general is largely premised on their ability to act objectively and impartially--both in substance and in perception. Some of the HHS Inspector General's actions--including her decision to delay a politically sensitive audit--created the perception that she lacked appropriate independence in certain situations. The Inspector General exhibited serious lapses in judgment that further troubled many OIG staff. For example, she inappropriately obtained a firearm that she briefly possessed at her workplace and OIG credentials that identified her as a law enforcement officer. The Inspector General also initiated a variety of personnel changes in a manner that resulted in the resignation or retirement of a significant portion of senior management, disillusioned a number of higher level OIG officials and other employees, and fostered an atmosphere of anxiety and distrust. Ultimately, the collective effect of these actions compromised her ability to serve as an effective leader of HHS's Office of Inspector General. Examining productivity trends is difficult because the work of the OIG often involves multiyear efforts and the results recorded for a single year are heavily dependent on work initiated in prior years. Similarly, savings achieved in any one year can be attributable to the culmination of efforts made over several years. Given these constraints, GAO noted that productivity at the OIG over the last 3 years increased in some areas and declined in others. Overall savings attributable to the OIG's efforts--as reported in its semiannual reports to the Congress--increased from $15.6 billion in fiscal year 2000 to $21.8 billion in fiscal year 2002. The number of individuals convicted for violating HHS program statutes and regulations--another key indicator of the OIG's performance--also increased. On the other hand, declines were noted in the number of settlements with providers who submitted false claims to the government and the OIG's education and outreach activities. GAO's survey results showed that employees' overall views of the organization, management, and their personal job satisfaction generally remained positive and relatively unchanged between 2002 and 2003. However, field office staff and those in lower level positions were considerably more positive in their views of the organization than their counterparts in headquarters and at the highest levels of management. Two units in particular--the OIG's Office of Counsel and the Office of Evaluation and Inspections--also had marked declines in morale. Both reported significantly lower levels of trust and confidence in the organization and less job satisfaction, compared to 1 year earlier. The Inspector General generally disagreed with some of our findings. In our response, we address why these findings raise concerns about the management of the OIG. We also provided our draft report to the Office of the HHS Secretary, but did not receive comments.

section_title: Letter
paragraphs: This report responds to your October 21, 2002, letter asking us to conduct  a review of the Department of Health and Human Services (HHS) Office of  Inspector General (OIG). As agreed with your office, we examined the  activities at the OIG under the leadership of Inspector General Janet  Rehnquist, who took office in August 2001 and resigned her office  effective June 1, 2003. Accordingly, the objectives of our review were to  (1) assess the Inspector General’s leadership, independence, and judgment  in carrying out the OIG’s mission, (2) identify changes in the OIG’s  productivity over the last 3 years, and (3) determine whether employee  morale has been sustained over the last few years.
To perform our review, we interviewed more than 200 current and former  OIG employees. We examined more than 8,000 pages of documents— including OIG reports, internal studies, personnel records, and policies  and procedures. We also replicated a Web-based employee survey  conducted by the OIG in January 2002—administered in January and  February 2003—to assess any changes in employee views about their work  environment. In addition, to assess the level of cooperation between the  OIG and some of its law enforcement partners, we spoke with officials  from the Department of Justice (DOJ), Medicaid Fraud Control Units from  several states, and the National Association of Medicaid Fraud Control  Units. We also interviewed three current or former inspectors general  from other federal agencies to better understand their role and the  conduct expected of them. We performed our review from October 2002  through May 2003 in accordance with generally accepted government  auditing standards. For a detailed description of our scope and  methodology, see appendix I.
subsections: section_title: Background
paragraphs: In 1978, Congress passed the Inspector General Act, creating Inspector  General offices in 12 federal agencies. This followed growing reports of  serious and widespread breakdowns in agencies’ internal controls. These  new OIGs were established as independent and objective offices within  their respective agencies to promote economy, efficiency, and  effectiveness in government programs and operations and to prevent and  detect fraud and abuse. In addition, they were created to keep agency  heads and Congress fully informed about problems and deficiencies in  program operations, as well as needed corrective action. Over the years,  the act has been amended to increase the number of inspectors general.  The President, with the advice and consent of the Senate, appoints  inspectors general at cabinet-level departments and other large agencies,  including HHS. The inspectors general at smaller, independent agencies  and other federal entities are appointed by the heads of their organizations  and have essentially the same authorities and duties as those appointed by  the President. Presently, there are 28 inspectors general appointed by the  President and 29 appointed by their agency heads.
Inspectors general hold a unique place in the executive branch of  government. They report to and are subject to the general supervision of  their agency heads, but carry out their duties independently. In addition,  they have reporting obligations to both the heads of their agencies and  Congress. Those that are presidentially appointed are among the few such  appointees that are to be selected “without regard to political affiliation  and solely on the basis of integrity and demonstrated ability.” To help  maintain their independence and fulfill their mission—which often  involves being publicly critical of their own departments—inspectors  general must familiarize their departmental colleagues with their special  role.
Because they are charged with independently protecting the integrity of  federal programs, inspectors general must be impartial in fact and  appearance. Government Auditing Standards, effective in January 2003,  call for auditors to “be free, both in fact and appearance from personal,  external, and organizational impairments to independence.” These  standards also require that auditors “avoid situations that could lead  reasonable third parties with knowledge of the relevant facts and  circumstances to conclude that the auditor is not capable of exercising  objective and impartial judgment . . ..” Given that their independence and  impartiality is so critical, inspectors general need to be sensitive to how  their actions might be perceived and interpreted by their staffs, the  administration, Congress, and the public.
About 300 of the approximately 1,600 HHS OIG employees are employed in  its Washington D.C. headquarters. The remainder work in its 8 regional  offices and 85 field offices in all 50 states. The OIG consists of five  components, or major units, each headed by a deputy inspector general.  The office is led by 13 Senior Executive Service level employees, who all  work in headquarters, and about 60 GS-15 level employees. About two- thirds of the GS-15 employees are spread across the various components  in headquarters with the remaining third located in the OIG’s regional  offices.
Consistent with the act, the OIG maintains the Office of Audit Services  (OAS) and the Office of Investigations (OI). They each represent about 40  percent of the OIG’s budget. OAS is responsible for auditing a variety of  HHS health care programs and generally spends about 80 percent of its  resources on projects related to the Medicare and Medicaid programs. Its  findings can result in program improvements and the return of  overpayments to the federal government. In addition, OAS provides audit  support to OI. OI investigators typically pursue allegations of criminal  conduct that they receive from contractors that process Medicare claims,  state Medicaid Fraud Control Units, officials involved in administering  HHS’s many grant programs, and others. When investigators find evidence  of potential wrongdoing, they refer the matter to DOJ for possible  prosecution or the OIG may opt to impose other sanctions.
The OIG has established three additional components to enable it to fulfill  its mission. The Office of Evaluation and Inspections (OEI) conducts  short-term management evaluations of HHS programs that generally  involve significant expenditures and services to beneficiaries or in which  important management issues have surfaced. Its reports are expected to  identify opportunities for improvement in departmental programs. While  OAS may audit the same federal programs examined by OEI, the scope of  OEI studies is typically broader and would more likely involve the use of  surveys, interviews, and other qualitative research methods. A relatively  small component, OEI represents about 10 percent of the office’s  resources. The Office of Counsel to the Inspector General (OCIG) provides  legal services to the OIG. Among other things, it renders advisory opinions  to health care providers and develops model industry guidance for  compliance with relevant laws and regulations. It also has several  sanctions at its disposal to penalize those who abuse HHS programs.  Finally, the Office of Management and Policy (OMP) is responsible for the  administration of the office, which includes overseeing the budget,  supporting the office’s information technology needs, and working with  the media. It is also responsible for the OIG’s human resource  management activities, but obtains significant personnel support from the  department’s centralized Program Support Center. OCIG and OMP each  represent about 5 percent of the OIG’s budget.
The OIG plays an instrumental role in identifying and investigating  individuals and entities that may have abused HHS programs. It may make  referrals to DOJ for possible prosecution under applicable criminal  statutes. In addition, health care providers who violate federal laws and  regulations may face a variety of civil sanctions. The OIG may make use of  the False Claims Act—the federal government’s primary civil remedy for  false or fraudulent claims—and refer such matters to DOJ. The act  imposes substantial penalties on those who knowingly submit false claims  to Medicare and other federal programs.
If a provider has filed a false claim that DOJ opts not to pursue through the  use of the False Claims Act, the OIG may impose other sanctions, such as  civil monetary penalties (CMP), against that health care provider. CMPs  are also imposed for other types of improper conduct, such as violations  of statutory prohibitions on “kickbacks” in connection with patient  referrals. The OIG also can assess CMPs against hospitals for “patient  dumping,” that is, failing to provide appropriate treatment to patients  presenting a medical emergency. The amount of the CMP imposed is  related to each provider’s specific violation. The OIG may also exclude  health care providers from participating in Medicare, Medicaid, and other  federal health programs if they have, for example, been convicted of a  criminal offense related to Medicare—including health care fraud or  patient abuse and neglect—or had their license suspended or revoked.  OCIG may also opt to negotiate corporate integrity agreements with health  care providers.
Although the OIG focuses the majority of its attention on health care  programs, its activities extend to other areas as well. For example, the OIG  has made the detection, investigation, and prosecution of absent parents  who fail to pay court-ordered child support a priority. The OIG works with  other federal, state, and local agencies to expedite the collection of these  payments. Parents who repeatedly fail to honor such obligations are  subject to criminal prosecution. The OIG’s recent activities with respect to  parents who have defaulted on their child support payments resulted in  152 convictions and more than $7 million in court-ordered criminal  restitution in fiscal year 2002.
section_title: Examination of the Inspector General’s Actions Regarding Independence and Judgment
paragraphs: We examined the independence that was reflected in the Inspector  General’s decision-making during her tenure. In addition, we reviewed  personnel changes that she initiated and evaluated her judgment in several  instances. We interviewed appropriate staff, including the Inspector  General herself, and examined relevant documentation.
subsections: section_title: The Inspector General’s Independence
paragraphs: Current and former OIG headquarters employees frequently expressed  concerns about the Inspector General’s independence. These concerns  centered on several incidents—some of which were widely reported by  the media. Employees also identified other audits and investigations that  they felt may have suffered from inappropriate management intervention.  We concluded that the following four incidents involved actions on the  part of the Inspector General that at least contributed to the perception of  a lack of independence.
subsections: section_title: Florida Pension Audit
paragraphs: In the spring of 2002, the OIG was scheduled to begin an audit of the  Florida Retirement System. The objective was to evaluate whether the  state appropriately charged the federal government for the pension  expenses of state agency employees who help administer federal  programs. The auditors specifically wanted to determine whether funds  designated as federal contributions to the retirement system were used to  provide for pension expenses, and whether the federal contribution rates  were reasonable.
The OIG’s first meeting to discuss this audit with Florida pension officials  was scheduled for April 16, 2002. The day before, the Chief of Staff to the  Florida governor placed an urgent call to the Office of the HHS Secretary,  requesting that the audit be delayed to accommodate the new pension  department director who was going to assume his position in a few weeks.  This call was ultimately referred to the Inspector General, who instructed  her Deputy for Audit Services to delay the audit for a few days. The  Inspector General subsequently ordered a second delay until July. Due to  subsequent scheduling problems affecting both OIG and Florida pension  staff, the audit team did not begin its work until September 2002.  Allegations made by OIG employees and the media suggested that the  federal government’s contributions to the Florida retirement system could  be excessive and that a report on these contributions might affect the  outcome of the Florida governor’s race that November.
When asked about the incident, the Inspector General stated that she  agreed to temporarily postpone the audit until she could determine the  appropriate response to the request and did not have any involvement in  subsequent delays. She also insisted that audits are frequently delayed,  that her decision to delay the audit was not politically motivated, and that,  even if the audit had begun in April, it would not have been completed  before the election. She told us that, in hindsight, she could have handled  the situation differently by referring the request to the Deputy for Audit  Services, but she did not believe she acted inappropriately in these  circumstances.
We believe that the Inspector General did not appropriately investigate the  implications of her decision before agreeing to delay what ultimately  resulted in a report containing significant monetary findings. First, Florida  pension department officials could have known that a substantial  overpayment existed, and that a delay in the OIG’s audit could have  benefited the state by changing the time frames used to calculate the  amount it owed. In fact, the draft report on the Florida pension audit  contains a finding that there were excessive federal contributions totaling  about $517 million, which the state will be required to return or offset  against the amount of future federal contributions to the retirement fund.  Second, given that the team was scheduled to begin its work in April 2002  and had estimated that the audit report would be drafted in 6 months, it is  conceivable that the report could have been available by election day, if  the audit had begun when originally planned. Finally, contrary to the  Inspector General’s recollection, we found that she sent an e-mail message  to her Deputy for Audit Services in April 2002 instructing him to postpone  the audit until July 2002. The Inspector General acknowledged that,  although short delays in commencing audits are common, it was  admittedly unusual for a request for a delay to be directed to, and resolved  at, her level.
section_title: York Hospital
paragraphs: In February 2000, the OIG alleged that York Hospital—located in York,  Pennsylvania—had submitted improper claims for services provided to  Medicare beneficiaries. The OIG had notified the hospital that it planned  to impose a CMP and was engaged in negotiations with the hospital when  the Inspector General assumed office. The OIG attorneys had estimated  that York Hospital’s potential liability was $726,000.
Soon after taking office, the Inspector General received a letter from three  members of Congress encouraging her to settle the case quickly.  According to the former Chief Counsel, the Inspector General told him, “I  hate this case; get rid of it.” Feeling as though they had to move fast, OIG  attorneys lost the benefit of time—which they explained is a key factor in  resolving a case in the government’s favor—and quickly settled the matter.  The former Chief Counsel also noted that the settlement amount of  $270,000 was far less than the attorneys believed the government could  have received had negotiations proceeded as they had planned.
The Inspector General indicated that she in no way directed a settlement  or personally involved herself in the York Hospital negotiations. She also  stated that if her OCIG staff perceived that they were under pressure to  settle the case quickly, they misinterpreted her instructions. She told us  that she simply wanted to settle this case in a timely manner.
Although the Inspector General said she did not intend to pressure her  staff, the former Chief Counsel told us that he and those responsible for  negotiating with hospital officials clearly perceived a sense of urgency. He  also told us that her staff perceived that timing, rather than maximizing the  settlement amount, was her main concern. We believe that her staff acted  accordingly, possibly against the government’s financial interest.
section_title: Lithotripsy Claims
paragraphs: Two medical societies representing providers of lithotripsy services  threatened to sue the Centers for Medicare & Medicaid Services (CMS)  over a regulation resulting in the denial of claims submitted for payment to  the Medicare program. The CMS regulation implemented statutory  restrictions on physician referrals to providers in which the physicians  have an ownership interest and included lithotripsy services within the  scope of these restrictions. The medical societies maintained that  Congress did not intend to include lithotripsy services within the scope of  the statute and intended to litigate this matter, if a settlement could not be  reached quickly.
A partner in the law firm representing the two medical societies, who was  also a friend of the Inspector General, contacted her for assistance in  expediting this case. The Inspector General directed her former Chief  Counsel to contact the law firm and begin negotiating the matter, which  was under the jurisdiction of CMS and not the OIG. The former OIG Chief  Counsel was hesitant to intervene until the appropriate attorney  representing CMS in this matter could be consulted. Because CMS’s  attorney was unavailable for about a week, the former Chief Counsel took  no action during this time. According to the former Chief Counsel, the  Inspector General admonished him severely when she discovered that he  had not followed her instructions to immediately contact the law firm.
The Inspector General asserted that her office had a legitimate role in this  matter. Although the issue was being disputed between the medical  societies representing the lithotripsy providers and CMS, the Inspector  General believed that her OCIG staff, which advised Congress on  physician referral matters, was in a unique position to resolve the issue.  She pointed out that she did not personally involve herself in the matter,  nor instruct her staff about how to resolve the issue. Instead, she stated  that her goal was to help resolve a matter in which her attorneys had vast  expertise.
Despite the OIG’s expertise in this matter, we agree with the former Chief  Counsel that it would have been inappropriate for the OIG to intervene by  contacting the law firm to initiate discussions, particularly in the absence  of CMS’s attorney. If the Inspector General wanted OCIG’s expertise to be  offered to CMS, it would have made sense for OCIG to contact CMS’s  attorney before proceeding. CMS’s attorney responsible for handling this  matter told us that she would have been troubled if the OIG had  commenced discussions without her agency’s participation. Given the  Inspector General’s personal relationship with the medical societies’  attorney and the OIG’s lack of jurisdiction in the matter, her actions  created the impression that she was more interested in helping a friend  than offering advice to CMS, which called her independence into question.
section_title: Adjusted Community Rating Audit
paragraphs: On February 20, 2001, the OIG sent its draft report on adjusted community  rate proposals for Medicare+Choice organizations to CMS for comment.  This report was of potentially significant interest to congressional  committees, which were then considering the adequacy of payments in the  Medicare+Choice program. While OIG guidelines generally provide up to  45 days for audited entities to comment on its draft reports, the  publication of this report was delayed for 14 months while the OIG waited  for comments from CMS. Ultimately CMS agreed with the OIG’s findings in  written comments on April 16, 2002.
Some employees alleged that the delay in issuing this report reflected a  lack of independence on the Inspector General’s part. They suggested that  the Inspector General should have taken a more active role in expediting  the report’s issuance. They pointed out that the CMS Administrator  initially disagreed with the draft report’s findings and hired a consultant to  validate the OIG’s results. According to these employees, it took CMS  more than a year to replicate the OIG’s work and determine that it agreed  with the report’s findings. OIG employees told us that the Inspector  General tolerated this situation because she was unwilling to issue a  relatively controversial report without the benefit of CMS’s agreement.  The delay in issuing this report diminished its usefulness because  congressional committees were focused on other concerns by the time the  report was finalized.
The Inspector General stated that she was only vaguely familiar with this  project but was certain that she did not direct her audit team to delay the  report’s issuance. Although she recalled that the CMS Administrator  initially disagreed with the report’s conclusions, she told us that she did  not remember the specific time frames associated with it.
Our evidence shows that the Inspector General’s staff tried to enlist her  assistance in expediting CMS’s comments to no avail. By permitting CMS  to delay the report’s publication, the Inspector General created the  appearance among her staff of being unduly influenced by CMS. In our  view, a time sensitive report of congressional interest should have, at the  very least, garnered more of the Inspector General’s attention.
section_title: The Inspector General’s Personnel Changes
paragraphs: During the Inspector General’s tenure, staff turnover among the OIG  senior headquarters staff has been considerable. Between September 2001  and November 2002, at least 20 OIG senior managers retired, resigned, or  were reassigned. Ten of these were Senior Executive Service employees,  most of whom had over 25 years of government service and had played an  important leadership role at the OIG for many years. The others were   GS-15 employees who were instrumental in carrying out specific office  functions. The Inspector General’s representative characterized these  changes as voluntary and beneficial to the overall mission of the office.
The Inspector General told us that these changes were made to provide  senior managers with new insights into agency operations and to  capitalize on the fresh perspectives they could bring to their new jobs.  However, we found that the sudden and unexplained nature of many of the  Inspector General’s actions resulted in a widespread perception of  unfairness among her staff. In addition, the promotion of a close advisor to  the Inspector General, to the position of Director of Public and  Congressional Affairs, raises a legal concern.
We found the circumstances surrounding the departures of eight senior  OIG managers to be particularly troubling. Four of these eight managers  who left the OIG or were detailed elsewhere were members of the Senior  Executive Service. One of the four took an early retirement after the  Inspector General proposed that the department assign him to a position  outside of his local commuting area with the assumption that he would  retire instead. Another retired after most of his responsibilities were  reassigned to another official or eliminated. A third resigned about 6  weeks after the Inspector General reassigned his job responsibilities and  directed that he not report to his office and instead spend his time seeking  new employment. Finally, one manager was detailed to a temporary  position within HHS and was also instructed not to return to his OIG  office. He is currently seeking new employment.
These four individuals told us that the Inspector General had not informed  them of specific deficiencies in their performance, given them any  opportunity to improve their performance, worked with them to find a  mutually satisfactory resolution to her concerns, or provided an adequate  rationale for her decisions to remove them from their positions. Moreover,  three of these managers told us that they were shocked with the urgency  she displayed when asking them to leave the OIG, and two perceived that a  single event ultimately led to the Inspector General’s decision to remove  them. For example, in one instance, a senior manager linked his removal  to an incident in which a problem had to be resolved in the Inspector  General’s absence. Although he successfully contacted her and proposed a  solution, she did not wish to address the matter until her return to the  office. He delayed taking action, as she directed. However, according to  this official, when the Inspector General returned, she was angry and  suggested that he had tried to pressure her into accepting his proposed  solution, essentially excluding her from the decision-making process.  Describing their departures from the OIG, these four individuals told us  that they felt they had no alternative but to leave their positions. Other  OIG staff also told us that these four changes—all of which were initiated  by the Inspector General—were involuntary.
The other four individuals whose departures were particularly troubling  were GS-15 level managers from OMP, OCIG, OI, and the Inspector  General’s Immediate Office. One manager resigned after being reassigned  twice within 9 months. According to several OIG employees, the purpose  of this manager’s second reassignment was to accommodate the Inspector  General’s preference that this manager no longer work in the OIG  headquarters building. The Inspector General gave no explanation why she  wanted this individual to work in a remote location. A second was  reassigned to an interagency task force for an indefinite period after his  position was abolished. The Inspector General reportedly no longer  wanted him in the OIG headquarters building. The third individual was  temporarily reassigned to a position at another HHS agency and  subsequently resigned. He told us that his duties were curtailed following  a briefing of congressional staff in which he voiced an official OIG opinion  that conflicted with that of CMS. The fourth individual retired after being  reassigned from the Inspector General’s Immediate Office to another  component. Some staff members perceived that the reassignment of this  individual resulted, in part, from her requesting—without the Inspector  General’s knowledge—a gun safe to properly store a firearm that the  Inspector General had recently acquired. Like the reassignments at the  senior executive level, the Inspector General initiated these changes.
Some of the employees we interviewed were skeptical that these changes  were necessary and asserted that they actually damaged the organization’s  effectiveness. Specifically, they were concerned with the sheer number of  personnel moves made in a relatively brief period of time and that their  new component heads lacked experience in the areas that they were going  to lead. They also expressed concerns about the Inspector General’s  motivations because they felt that the changes generally had not been  adequately explained to the employees involved. The abruptness of these  changes and the lack of any overall explanation for them heightened  employees’ mistrust. Although some employees were supportive of the  Inspector General’s organizational changes or felt unaffected by her  actions, comments made during our interviews and in our employee  survey highlighted the frustration many employees—especially at  headquarters—felt due to the perception of unfairness associated with  these personnel changes. We found that the magnitude and abruptness of  the Inspector General’s actions raised fear and anxiety among her staff.
We asked the Inspector General about each of the individuals to obtain her  rationale in making these personnel decisions. The Inspector General told  us that she was concerned about the individuals’ privacy and that she was  uncomfortable discussing the circumstances involving these managers  with us.
Finally, we identified one matter giving rise to a legal concern. We  obtained information suggesting that a member of the OIG’s staff may  have been preselected for a GS-15 position as the Director of Public and  Congressional Affairs. Specifically, as explained below, e-mail  communication by one of the Inspector General’s closest advisors implies  that a decision had been made to promote this employee to the GS-15 level  prior to the initiation of a competitive selection process. Citing the  individual’s outstanding performance as a GS-14 in the same office, the  Inspector General had directed the employee’s supervisor to promote her  to a GS-15 at the earliest opportunity. Shortly thereafter, an advisor to the  Inspector General contacted the individual’s supervisor and emphasized  that the Inspector General believed that it was important for the individual  to have a GS-15 in her current position. The advisor urged him to initiate  the promotion process so that the GS-15 would be effective on the date of  her eligibility for promotion, or soon thereafter. The advisor further  explained that the Inspector General had made a commitment when the  individual agreed to take the GS-14 position that she would be promoted  to a GS-15 one year later. In addition, the OIG included a “selective  placement factor” in the GS-15 position description, reportedly to favor the  employee. OIG staff told us that, although the GS-15 position was  advertised both inside and outside of the agency, there was a widespread  perception that the selection had already been made. This perception may  account for the fact that there was only one applicant for the position.  While the information we obtained raises concern about a possible  preselection, we have not conducted the type of formal, factual inquiry  that would ultimately be necessary to determine whether the Inspector  General’s actions were unlawful.
section_title: The Inspector General’s Judgment
paragraphs: We identified several matters that raised concerns about the adequacy of  the Inspector General’s leadership. Some employees questioned the  Inspector General’s judgment in regard to her possession of a firearm in  the office, as well as law enforcement credentials. Others raised concerns  about the manner in which she conducted her business travel. In addition,  several employees interpreted some of the Inspector General’s actions as  demonstrating a lack of interest in key office operations.
subsections: section_title: Report by the President’s Council on Integrity and Efficiency
paragraphs: In the fall of 2002, the Integrity Committee of the President’s Council on  Integrity and Efficiency (PCIE) received an allegation that the Inspector  General had improperly requested and obtained a firearm from her Deputy  Inspector General for Investigations. Subsequently, the Integrity  Committee received a second allegation that the Inspector General had  improperly obtained supervisory special agent law enforcement  credentials. After consulting with DOJ officials, who declined to pursue  these allegations, the Integrity Committee proceeded with its investigation.  The PCIE forwarded its report to the Deputy Secretary of HHS on April 4,  2003.
The PCIE found that the Inspector General had obtained a firearm from an  OIG special agent and maintained it in her Washington, D.C. office for a  short period of time. An OIG Memorandum of Understanding (MOU) with  DOJ and the Federal Bureau of Investigation set forth a process for  deputizing OIG special agents to allow them to carry firearms, make  arrests, and execute warrants when carrying out their law enforcement  functions. However, the PCIE found that the Inspector General had not  met the job classification and training requirements outlined in the MOU  and had not been deputized. In an interview with PCIE investigators, the  Inspector General stated that she believed that inspectors general were  statutorily authorized to possess firearms and that she had not reviewed  the MOU for deputation of OIG special agents.
In regard to the second allegation, the PCIE found that the Deputy  Inspector General for Investigations obtained supervisory special agent  credentials for the Inspector General because she did not want the  Inspector General to have any difficulty gaining access to secured areas in  the event of a terrorist incident. The Inspector General told PCIE  investigators that other inspectors general did not seem to know how to  handle the issue of access to secured areas in the event of a terrorist  attack, but she had never asked them if they had law enforcement  credentials. She also told investigators that she had the credentials in her  possession for a short time, and returned them to her Deputy for  Investigations to store in a safe. (Before the PCIE investigated this issue,  concerns about the ease with which OIG credentials could be obtained  came to our attention. We examined the internal controls for the  credentialing system and identified several weaknesses, which are  described in appendix II. OIG officials have since told us that they have  taken steps to correct these weaknesses.)
The PCIE report identified several criminal statutes as relevant to the  allegations, including provisions of federal and District of Columbia law  concerning the possession of firearms, which are applicable to those  working in federal buildings. At the conclusion of the investigation, DOJ  officials advised the PCIE that it declined to prosecute the Inspector  General for any possible violations of criminal statutes regarding the  possession of a firearm or law enforcement credentials. In addition, in the  letter to the Deputy Secretary of HHS accompanying its report, the PCIE  advised that the Inspector General’s resignation mooted the need to take  any administrative actions against her. It also expressed deep concern  about the actions of some OIG employees who facilitated the Inspector  General’s acquisition of these items.
section_title: The Inspector General’s Travel
paragraphs: Another issue that persistently surfaced during our review was  perceptions of the propriety of the Inspector General’s business travel. As  the head of a large organization with offices nationwide, the Inspector  General is entitled—and expected—to periodically visit these offices to  provide oversight, guidance, and support to her staff. In addition, the  Inspector General may engage in other business-related travel, such as  attending conferences and meeting with provider organizations and other  external groups. Inspectors general—like other government employees— are not prohibited from planning personal travel in conjunction with their  business trips. However, we spoke with current and former inspectors  general from other federal agencies, and they told us that they generally  refrain from including personal travel with their business trips for fear of  raising suspicion about their motivation or integrity. While no one alleged  that the Inspector General violated travel regulations, some current and  former officials questioned her motivation for planning certain trips that  included a personal element, such as sightseeing activities—sometimes  with two senior OIG managers.
To better understand the purpose of the Inspector General’s travel, we  examined all of the documentation related to her trips, including travel  orders, vouchers, and detailed itineraries prepared by her office. We found  that during the first 4 months of the Inspector General’s tenure she took  four trips outside of the Washington D.C. area. None of these trips  included a personal element or any companions. However, over the next  12 months, the Inspector General traveled eight more times and included  personal activities on half of these trips. In addition, she invited one or two  senior managers to accompany her on six of these eight trips.
Three of the Inspector General’s trips in particular raised concerns, arising  from a perception that this travel was motivated by other than official  duties. In some of these cases, large blocks of time could not always be  accounted for. For example, the Inspector General took one trip to San  Francisco and Phoenix that spanned 8 days and included 2 days of  personal time on a weekend. In examining the business portion of this trip,  we were only able to determine that the Inspector General made two half- hour speeches and traveled between these cities and Washington, D.C.  Further, in some cases, personal activities—sometimes involving the  participation of the two senior managers—were included. While we did  not validate the managers’ activities on these trips beyond their own  assertions, we believe that it is appropriate for the Inspector General to  ask managers to accompany her as needed on business-related travel.  However, including her colleagues in her personal activities during travel  contributed to a perception that the business reasons for these trips were  pretexts and that the trips were planned solely for nonbusiness purposes.
In responding to our inquiries regarding the Inspector General’s travel, she  indicated that all of her trips were made for legitimate business purposes.  She also told us that she was not concerned with any perceptions OIG  employees may have had about her travel. Finally, in a written response to  our inquiry regarding approximately 3 days of unaccounted time during  her San Francisco and Phoenix trip, she indicated that she spent her time  performing office work and preparing for one of her two speeches. She  offered no other elaboration on her business activity.
section_title: The Inspector General’s Leadership in Resolving Budgetary Problems
paragraphs: During our study, the Deputy Inspectors General were grappling with a  major budgetary shortfall due to aggressive hiring in fiscal year 2002,  lower than expected attrition throughout the OIG, and uncertain funding  levels for fiscal year 2003 that had yet to be resolved. Senior OIG officials  told us that they were concerned that, without a quick solution, they might  ultimately violate the Antideficiency Act. In February 2003, the Deputy  Inspectors General were developing various proposals to react to their  forecasted budget shortfall. The deputies had severely limited travel,  training, and other human resource activities in their components. In  addition, they were reallocating staff positions to accommodate the  budget—regardless of where the positions were actually needed. Positions  that became vacant through attrition were transferred to the overstaffed  components. By gaining the vacant positions, the overstaffed components  were able to reduce the number of staff considered to be in excess in their  units.
Some of the deputies expressed strong resentment about the chaos this  situation caused within their components. For example, a relatively small  component that lost a key member of one of its functional teams could not  replace that individual, and instead had to continue to meet mission goals  with one fewer supervisor. Other component heads explained that the lack  of funds to perform routine duties in the field affected morale and could  impact long-term productivity.
This situation could have been avoided if OIG leadership had developed a  human resource hiring and development plan that contained realistic  budget projections and hiring goals that all deputies would have to follow.  Historically, the Inspector General’s Principal Deputy was responsible for  ensuring that component heads worked together to carry out such a plan,  but the Principal Deputy position had been vacant for months. As a result,  component heads we spoke with felt that they did not have the authority  to fill the leadership void that developed in this instance, and relied on the  Inspector General to impose whatever fiscal constraints were necessary to  establish an equitable budget allocation among the components. While the  Inspector General expressed concern about funding issues, she did not  take aggressive steps to remedy the situation. Although the deputies  ultimately resolved their financial situation, at the time of her resignation,  the component heads were still struggling among themselves with these  budgetary challenges.
section_title: Evaluation of OIG Productivity
paragraphs: The OIG conducts a variety of activities that aim to improve program  operations, identify and recover overpayments, and investigate and  sanction those who violate statutes and regulations governing HHS  programs. Evaluating the effect of the Inspector General’s recent actions  on productivity is difficult to assess in the short term. For example, in  addition to the decisions she made and the personnel moves she initiated,  a variety of other factors contribute to productivity. Two factors make it  impossible to reach an overall conclusion about OIG productivity for any  limited period of time. First, fluctuations in performance are to be  expected in any given year, given the multitude of the OIG’s activities.  Second, it is difficult to compare performance from one year to the next  because the results in one period are heavily dependent on work in the  pipeline that was initiated in prior years. For example, it could take 2 or 3  years from the time a project is initiated until a recommendation is made  and subsequently implemented; investigating potential criminal activity  and prosecuting the individuals involved could take even longer. Many of  the OIG’s productivity measures remain comparable to prior years or  showed increases, but we found that several other key indicators of  performance have declined since the Inspector General took office.
subsections: section_title: Savings, OAS Reports, and Convictions
paragraphs: We analyzed a wide variety of performance measures to evaluate the OIG’s  effectiveness and found that many of these measures indicated that the  OIG may be performing well, as table 1 shows. For example, in its  semiannual reports covering fiscal year 2002, the OIG identified almost $22  billion in savings attributable to its work. The OIG consistently reported  increases in these savings since fiscal year 1997. In addition, the number of  OAS reports published has increased each year since fiscal year 2000.  Also, the number of convictions resulting from the OIG’s investigative  referrals has steadily increased over the last 6 years.
OI officials, who told us that the number of convictions is an important  measure of their success, also said that they appear to be on target in  achieving even more convictions in fiscal year 2003. At the midpoint of the  current fiscal year—March 31, 2003—the OIG reported 320 convictions.
Although it is difficult to measure the “sentinel” effect of some of the OIG’s  activities, it has taken steps to encourage lawful and ethical conduct by  the health care industry, which we believe should be acknowledged. For  example, in recent years the OIG has actively worked with the private  sector to develop compliance guidance to prevent the submission of  improper claims and to discourage inappropriate conduct by providers. In  March 2003, the OIG issued compliance guidance for ambulance suppliers.  This was followed by the publication of compliance guidance for  pharmaceutical manufacturers in April 2003.
section_title: Exclusions from Medicare
paragraphs: Like convictions, the number of providers excluded from the Medicare  program is a strong indicator of OI effectiveness. Although the number of  exclusions imposed declined in fiscal year 2002, reversing a trend of  increases since fiscal year 1999, we were unable to determine whether this  decline reflects diminishing productivity. The OIG Chief Counsel  explained that, in 2002, the Department of Education became responsible  for processing most of the exclusions of health care providers who had  defaulted on the repayment of their federally funded student loans. The  Chief Counsel told us that in 2001, when the OIG still had this  responsibility, it excluded 518 providers who had defaulted on these loans.  In 2002—the transition year—the number of such providers excluded by  the OIG dropped to 166. Table 2 shows the OIG’s exclusions imposed since  fiscal year 1997.
section_title: Settlements, Recoveries, CMPs, and CIAs
paragraphs: We found declines in the use of sanctions available to the OIG. For  example, we noted reductions in the number of settlements and recovery  amounts that result from the OIG’s False Claims Act referrals to DOJ.  Similarly, there were declines in the number of CMPs and CIAs recently  imposed. Table 3 shows that both the number of settlements and amount  of recoveries declined significantly in fiscal year 2002, compared to fiscal  years 2000 and 2001.
OIG officials told us that its False Claims Act cases are strongly tied to  DOJ’s efforts to combat health care fraud, which have had to compete  with investigative resources dedicated to the September 11, 2001, terrorist  attacks. In addition, DOJ has reduced the number of its national health  care antifraud initiatives in recent years as well as the number of  individual cases that it pursues under the auspices of each initiative. OIG  officials also attribute this decline to its increasing emphasis on program  compliance, which the OIG believes has had a sentinel effect on providers.  Although the number of False Claims Act settlements and recoveries have  declined, DOJ officials and the Medicaid Fraud Control Unit  representatives we spoke to told us that they were pleased with the quality  of the support they received from the OIG in pursuing abusive or  fraudulent providers. However, several of these officials were concerned  that the OIG could not devote more resources to assist them in their  investigations.
Another important indicator of OIG productivity is the imposition of  CMPs. As shown in table 4, the number of these cases had a marked  decline since fiscal year 2000.
In explaining the declining number of CMPs imposed, OIG officials offered  two explanations. First, they told us that the increase in convictions may  account for the decline in CMPs, which are typically imposed when more  stringent penalties cannot be used. Because convictions have recently  increased, there would be fewer opportunities to impose CMPs. Second,  officials suggested that the office’s previous aggressiveness in pursuing  patient dumping cases—which generally made up between 65 and 90  percent of all CMPs imposed each year—has been a strong deterrent. The  officials also emphasized that patient dumping cases have proven to be  resource intensive. As a result, the OIG can only afford to pursue the most  egregious cases.
CIAs, typically negotiated in conjunction with False Claims Act  settlements, are also an indicator of the OIG’s productivity. CIAs consist of  “integrity provisions” that are intended to ensure that a provider’s future  transactions with Medicare and other federal health care programs are  proper and valid. Such provisions include implementing an OIG-approved  compliance program, use of an independent review organization to  annually review provider billings, and other periodic monitoring and  reporting requirements. Providers accept the imposition of the CIAs and,  in turn, OCIG agrees not to seek additional administrative sanctions. As  table 5 shows, the number of active CIAs, as well as the number of newly  negotiated CIAs, has declined since 2001.
OCIG officials attributed the most recent decline to several factors. First,  the number of civil False Claims Act settlements declined between 2001  and 2002, resulting in fewer providers with whom to negotiate CIAs.  Second, in fiscal year 2002, OCIG began implementing the Inspector  General’s November 20, 2001, “Open Letter to Health Care Providers”  regarding CIAs. CIAs had long been a concern of providers because of the  costs associated with implementing the specified integrity provisions— such as retaining an independent review organization each year to review  a statistically valid sample of billings. The November open letter  announced that the OIG’s policies and practices regarding CIAs were  being modified in response to those concerns.
The letter noted, in part, that the OIG would no longer seek to negotiate  CIAs with every provider settling a False Claims Act case with the  government. In some situations, corporate compliance matters would be  negotiated separately, after settlement of the False Claims Act case. The  letter also indicated that the OIG would consider increasing its reliance on  providers’ internal audit capabilities. For example, some providers may  not be required to retain an independent review organization. Similarly,  not all billing reviews would be subject to statistically valid random  sampling. Instead, these providers would be able to self-certify compliance  based on the error rate indicated by reviewing an initial sample of their  billings. Further, the new approach to CIAs could also be applied to  previously negotiated CIAs. As a result, in fiscal year 2002, OCIG  renegotiated 94 existing CIAs associated with False Claims Act  settlements. The revised CIAs contained “certification agreements,”  permitting providers to self-certify their compliance with the specific  provisions contained in their agreements, instead of retaining an external  review organization for this verification.
section_title: Outreach and Education Activities
paragraphs: We also found that there has been a considerable drop in the testimonies  and outreach and education activities performed by OIG employees. Prior  to the current Inspector General’s tenure, the OIG frequently provided  assistance to congressional staff developing legislative proposals related  to HHS programs, offered informal advice about program oversight, and  testified at congressional hearings. In addition, OIG employees routinely  presented the results of their work at conferences, meetings, and in other  educational forums. However, as shown in table 6, the number of  testimonies and speeches and other presentations by OIG employees  revealed a significant decline in the assistance provided during the last  fiscal year—especially among OCIG employees.
We spoke with several congressional staff working for committees with  jurisdiction over HHS programs who told us that they were not satisfied  with the level of support they were currently receiving from the OIG.  While formal requests for assistance were fulfilled, congressional staff  indicated that OIG employees no longer discussed issues with them  informally, as they had in the past. In our interviews, primarily at  headquarters, several OIG employees recognized that they were no longer  providing what congressional staff members considered to be a valuable  service and what they considered to be a meaningful part of their work.
OIG officials emphasized that their responsiveness to Congress is still an  extremely high priority. They explained that the Inspector General  instituted a more centralized approach to providing assistance to  congressional staff and other external groups than had her predecessors in  an attempt to ensure the quality and appropriateness of the assistance  provided. In response to the declining number of testimonies, OIG senior  officials told us that they are very willing to appear at congressional  hearings when they have relevant material to present. However, they  explained that the Inspector General does not consider the number of  testimonies to be a relevant performance measure.
In regard to speeches and other presentations, the decline was partly due  to a policy change in the spring of 2002 that moved approval authority for  these activities from the individual component heads to the Director of  Public and Congressional Affairs. A lack of travel funds for collateral  activities in the first half of the fiscal year also limited OIG’s staff  participation in discretionary events. According to this Director, because  she could not approve all of the requests, she considered the nature and  size of the audience, in addition to the cost of the trip, in deciding whether  approval would be granted.
section_title: OEI Reports
paragraphs: A number of employees of OEI told us that they have been frustrated with  the cancelation of projects since the Inspector General took office.  According to these individuals, many projects were well under way at the  time of their termination. Although OEI managers could not tell us how  many projects have been canceled under the current Inspector General’s  tenure, they could tell us how many of the OEI projects begun in fiscal  years 2000, 2001, and 2002 were subsequently canceled. As table 7 shows,  27 reports, or about 26 percent of reports started in 2002, were canceled  by the end of February 2003. According to OEI management, although  some projects have been canceled, the work performed on these projects  has been used by OEI teams involved in related OEI projects.
We followed up on several projects that recently had been canceled to  better understand management’s rationale for doing so. Staff members  brought these projects to our attention during the course of our work. In  one instance, a project was canceled 7 months after the team had  conducted the exit conference with the agency. More than 4,000 staff  hours had been expended on this project, which included three full-time  and one part-time staff and a paid intern. The Deputy Inspector General  ultimately told the team that the report lacked sufficient evidence and  would not be presented to the Inspector General for signature. Although  the team subsequently prepared two memoranda as substitutes for the  report, no product was ever issued—despite interest from the provider  community and relevant agency.
We have learned that OEI projects continue to be canceled. For example,  in March 2003 the Inspector General took the unusual step of recalling a  draft report, which had been sent to the relevant agency for comment in  February 2003. Both the Deputy Inspector General for OEI and the  Inspector General approved this draft. Also in March 2003, a related  project, which had begun in fiscal year 2002, was canceled as the OEI team  prepared for an exit conference with the agency it had evaluated. OEI  management decided to combine the results of both projects into a single  report. Although the OEI staff involved with these projects contend that  they briefed management several times over the course of these  assignments, the Deputy Inspector General for OEI explained that he  made this decision once he realized there were inconsistencies between  the two projects that needed to be reconciled. As of late April 2003, no  report had been published.
In conversations with the Inspector General and the Deputy for OEI, we  learned that they had been particularly concerned with the  appropriateness of criteria used by OEI staff in evaluations. They told us  that they were uncomfortable with the policy-oriented work that OEI had  done and were taking actions in the pipeline of OEI reports to address  what they viewed as shortcomings in the accuracy and sufficiency of  evidence in OEI products. The Deputy for OEI also explained that they  were providing training to all OEI staff on evidence standards with the  hope of improving the quality of future projects. OEI managers and staff  that we spoke to expressed surprise and frustration at these concerns and  pointed out that in the past, OEI had been recognized and praised by  Congress, the public, and the press for its high-quality evaluation work.
section_title: Measure of Employee Morale
paragraphs: Based on our survey and extensive interviews, we found in the aggregate  that employee views about the organization, management, and their  personal job satisfaction remained positive and relatively unchanged  between 2002 and 2003. However, we identified several groups of  employees whose morale was of concern, namely, employees working at  headquarters, those at the highest levels of management, and staff working  in two OIG components. Our analysis of open-ended survey comments  also revealed areas of dissatisfaction that were not fully captured by other  items on our survey.
Our survey and interviews found, in the aggregate, a high level of  satisfaction among OIG employees. Overall, positive responses to survey  items in both 2002 and 2003 averaged over 80 percent and no item  responses changed more than 5 percentage points between the 2 years.  Positive responses were especially prevalent both years for statements  such as “All things considered, my component is a good place to work” (89  percent and 87 percent, respectively) and “I believe that my work is  important to the success of the component” (94 percent and 93 percent,  respectively). Similarly, our interviews revealed an overall high level of job  satisfaction, typified by comments such as “I believe my work makes a  difference.” Staff repeatedly cited their close relationships with their  immediate work groups and their involvement on important issues as  reasons for their job satisfaction. We also identified some examples of  improvement. For instance, in both the survey and interviews, OI  employees indicated there had been an increase in communication with  upper management in their component over the last year.
We found that positive responses to most survey items were lower for  headquarters employees than for field staff. For example, we found that  there was a marked difference in positive responses—10 percentage  points—to the statement that “Everyone is treated with respect.” We also  found a 14 percentage point difference in positive responses to the  statement, “I have confidence and trust in my organization.” This pattern  of more positive responses from the field was consistent with statements  made during our interviews. Whereas many headquarters staff expressed  concern about the Inspector General’s actions, most field employees told  us that they felt insulated from, and largely unaffected by, the personnel  and other changes that occurred in headquarters.
In addition, our survey indicated that senior management staff— specifically members of the Senior Executive Service and GS-15  employees—were considerably more concerned than all other employees  about OIG leadership. While 88 percent of employees at the GS-14 and  lower levels agreed with the statement, “As an organization, the OIG has  clear goals,” only 67 percent of the senior management staff—those at the  GS-15 level and members of the Senior Executive Service—responded  positively to that statement. Further, about 70 percent of the employees at  the GS-14 level and lower levels indicated that they had confidence and  trust in the organization. On the other hand, only 56 percent of senior  managers agreed with that statement. In our interviews, some senior  management staff were extremely clear about, and supportive of, the  Inspector General’s goals, but others expressed confusion about the  Inspector General’s priorities for their components. Many in senior  management were disquieted by the decisions that resulted in some of  their colleagues retiring, resigning, or being reassigned during 2002. These  managers explained that they were uncomfortable because they did not  fully understand the motivations behind the Inspector General’s actions.
Our survey revealed a substantial deterioration in OEI employees’ views of  the organization, management, and their personal job satisfaction. For  example, a statement focusing on whether “upper management clearly  communicates the goals of my component,” elicited an almost 50  percentage point drop in positive responses between January 2002 and  February 2003 (compared to a 1 percentage point decrease in the  aggregate). Similarly, there was a 34 percentage point drop in positive  responses to the statement about being “fully informed about major issues  affecting my job” (compared to a 5 percentage point drop overall). Finally,  about 62 percent of OEI employees indicated a lack of trust and  confidence in their organization (compared to 30 percent overall).
The decline in the overall climate in OEI can be linked to a number of  changes that profoundly affected the staff in that component. OEI staff  told us that they were negatively affected by the abrupt departure of the  Deputy Inspector General, decreased communications from headquarters  management, changes and delays in the report review process, canceled  projects, and a narrowing of the scope of their work. In addition, OEI staff  explained that they have been disappointed by a decrease in the number of  their assignments that has resulted in what are considered to be “high- profile” products—those signed by the Inspector General, those issued as  standard blue-cover reports, and those placed on the OIG’s Web site.
Our employee survey also identified a distinct decline in positive  responses to survey items among OCIG employees—almost all of whom  work in headquarters. Of particular concern were answers to survey  statements addressing the adequacy of communication and job  satisfaction. For example, compared with 2002 survey results, there was a  22 percentage point drop in positive responses to the statement about  being kept fully informed about major job issues. OCIG employees also  reported a 16 percentage point drop in positive responses to the item “I am  satisfied with my job” and a 12 percentage point drop in their opinion that  “everyone is treated with respect,” compared with last year’s survey. Our  results also showed that 54 percent of OCIG employees lack trust and  confidence in their organization. The decline in the views of OCIG staff  can, in part, be attributed to changes implemented by the Inspector  General, and the atmosphere of anxiety and distrust that her actions  created. OCIG employees expressed concern about the circumstances  under which the former Chief Counsel and other senior managers left the  OIG. In addition, we were told that the curtailment of education and  outreach activities and contact with congressional committee staff had an  adverse effect on OCIG employee morale.
Finally, we analyzed the written comments that some employees opted to  write in the comment box provided on our survey. In total, 578 of the 1,451  survey respondents (40 percent) elected to write comments, which  allowed them to express opinions about issues that were not covered in  detail in our other survey items. Our analysis of these comments showed  that the majority were negative in tone (75 percent). Overall, the most  frequently mentioned categories were: morale (82 percent negative),  recent changes in headquarters management (61 percent negative),  sufficiency of training or equipment (85 percent negative), and quality of  headquarters management (80 percent negative). The demographic  characteristics of those who wrote comments were generally similar to the  overall sample of respondents, although those planning to leave the OIG in  the next 5 years and OEI staff were more likely to provide comments than  other survey respondents.
section_title: Agency Comments and Our Evaluation
paragraphs: We met with officials from the OIG and the Office of the HHS Secretary  and briefed them on our findings. We also provided them with a copy of  our draft report. In written comments on a draft of this report, the  Inspector General disagreed with some of our findings and  characterizations of certain events. The Office of the Secretary did not  provide comments.
In reference to our discussion about the OIG’s productivity, the Inspector  General stated that the OIG had achieved substantial accomplishments  under her leadership and direction and cited the savings attributable to its  work in fiscal year 2002. In addition, she highlighted some of the OIG’s  nonmonetary achievements during her tenure. As we noted in our draft  report, many of the OIG’s productivity measures have remained steady or  improved, including those cited in the Inspector General’s letter. However,  we also pointed out that making a conclusive determination regarding  productivity in the short term is extremely difficult because current  savings are often the result of efforts started in prior years. Our draft also  identified declines in other important areas, such as settlements and  recoveries.
In addressing our findings related to employee morale, the Inspector  General pointed out that our survey of OIG employees showed that  employee morale remained positive and relatively unchanged during her  tenure. However, our survey also identified several groups of employees  whose morale was of concern. For example, senior managers were  considerably more disturbed than all other employees about OIG  leadership. Further, headquarters employees expressed less satisfaction  with the organization and leadership than their counterparts in the field.  While the majority of OIG staff are located in field offices and generally  were more satisfied with their work environment than headquarters  employees, they also felt less affected by the changes instituted by the  Inspector General than their colleagues in headquarters. A striking  exception to field office employee satisfaction, as discussed in our draft,  was staff in OEI, whose dissatisfaction increased substantially compared  to last year.
The Inspector General also took issue with our discussion of the  circumstances surrounding the delay in beginning the Florida pension  audit. We included this example of her decision-making in our draft  because we believe that it demonstrated a lack of awareness and  appreciation of the need for the Inspector General to closely safeguard her  independence. We believe it is imperative that an inspector general  perform due diligence when responding to external requests—particularly  where independence could be questioned. We continue to believe that the  Inspector General’s decision to intervene at the request of senior officials  in the Florida governor’s office and her subsequent instructions to her  staff to delay the audit created a perception that her independence was  compromised. The Inspector General did not address the issue of her  independence in her comments. Instead, she disagreed with our  suggestion that the OIG’s report could have been available prior to the  November 2002 election, if the audit had begun 7 months earlier, in April  2002, as initially planned. While we cannot be certain that the final report  would have been issued by the election, we believe that it is likely that the  findings would have been made public—particularly since the actual  findings of the audit were reported by the media in March 2003, 6 months  after the work commenced.
Regarding the York Hospital matter, the Inspector General stated that she  discussed her concerns about the proposed settlement with her staff and  that she believed that seeking a larger settlement was not fair or  justifiable. However, during the course of our work, the Inspector General  told us that she did not direct a settlement or involve herself in  negotiations with the hospital. In any case, we believe that the Inspector  General’s actions in response to a letter from several members of  Congress contributed to the perception that she was not independent. The  Inspector General stated in her comments that she discussed this matter  with her attorneys and determined the OIG’s case was weak. However, the  former Chief Counsel and other OCIG attorneys told us that when she  instructed them to “get rid of” the case, she did not address the specific  facts or sufficiency of the evidence collected in this matter. Further, the  former OIG Chief Counsel did not share the Inspector General’s belief that  this was a weak case, and told us that he believed the government could  have obtained a higher settlement, absent any pressure to close the case  quickly.
Concerning the OIG’s delayed report on the adjusted community rate  proposals, the Inspector General pointed out that the report was already  delayed 7 months by the time she took office. While we acknowledge this  fact, in our view, the already lengthy delay should have prompted her to  take more aggressive action to either obtain CMS’s comments or publish  the OIG’s report without them. Although the Inspector General stated that  she relied on the advice of her senior staff in delaying the issuance of this  report, our evidence indicates that some of her senior managers were very  concerned that she took little action to expedite CMS’s comments. The  Inspector General indicated that she spoke to the CMS administrator  regarding this matter, but she did not indicate when this discussion  occurred or how CMS responded. However, the Inspector General did not  indicate—nor did we find any evidence to suggest—that she took more  rigorous steps to obtain CMS’s comments, such as imposing a deadline for  the publication of the report, regardless of the status of the comments. The  Inspector General also stressed that the delay in publishing the OIG’s  report had nothing to do with her independence. However, the fact that  CMS strenuously objected to the OIG’s findings, and that CMS was allowed  to delay its comments for over a year, in our view, at least contributed to  the perception that the Inspector General was not independent. In  addition, the Inspector General disputed our statement that this report  was a time sensitive one of congressional interest. We disagree. During the  summer and fall of 2001, Medicare+Choice legislative proposals were  developed in both the House and Senate. Also congressional hearings were  held on the status of the Medicare+Choice progam, which included the  issue of adjusted community ratings.
Regarding our assessment of personnel changes in the OIG, the Inspector  General stated that her actions were appropriate and that the nature of the  Senior Executive Service encourages rotations among staff. While we do  not dispute the Inspector General’s authority to reassign staff to meet  office needs, the manner in which she made these changes clearly created  an atmosphere of anxiety in the OIG. The Inspector General stated that  she explained the rationale for her decisions “over and over again.”  However, our discussions with staff members revealed that they did not  understand why many of the changes had been made. Moreover, most of  the eight senior managers whose departures we found particularly  troubling told us that the Inspector General never explained to them why  she wanted them to leave their positions. The Inspector General also  commented that our employee survey suggested that there were no  widespread negative perceptions among staff concerning her personnel  decisions. We disagree with this observation because our survey did not  contain a question related to her personnel changes. Instead, our survey  focused on employee satisfaction within their immediate work groups— most of which are in the field where the consequences of the Inspector  General’s changes were least felt. The Inspector General noted that most  of the individuals who left the OIG following her changes were in new  positions that were “at least equal to or better than” the ones they  occupied at the OIG and that she always promoted from within the  organization. We do not think that the current employment situations of  these former staff members are relevant to the Inspector General’s  personnel decisions, nor is her practice of promoting other employees  from within the organization.
In our draft report, we also discussed the OIG’s budgetary difficulties. In  her comments, the Inspector General described her efforts to respond to  this situation, which primarily consisted of directing one of her senior  managers—who was in an acting deputy position—to develop strategies  for resolving the OIG’s financial problems and to work with other senior  OIG managers to develop a spending plan. While we would fully expect  that the Inspector General would want to call on her management team to  confront the agency’s budgetary problems, our concern was that she  personally played only a minor role in resolving this matter, particularly in  the absence of a Principal Deputy. Given the Inspector General’s limited  personal involvement, the OIG’s senior management team lacked a leader  with sufficient authority to mediate any disagreements between them and  to take aggressive steps to identify appropriate solutions to the  organization’s fiscal challenges.
Finally, the Inspector General’s comments pointed out that OI had taken  steps to correct the deficiencies we noted in its credentialing system. We  acknowledged that corrective action has been initiated and this was  reflected in our draft report.
We have reprinted the Inspector General’s letter in appendix III.
We are sending copies of this report to the Secretary of HHS, the HHS  Acting Principal Deputy Inspector General, the former Inspector General,  and other interested parties. We will also make copies available to others  upon request. In addition, this report will be available at no charge on  GAO’s Web site at http://www.gao.gov. We will also make copies available  to others upon request.
If you or your staffs have any questions about this report, please call me at  (202) 512-7114. Additional GAO contacts and other staff members who  made key contributions to this report are listed in appendix IV.
section_title: Appendix I: Scope and Methodology
paragraphs: To conduct our review, we focused on three key areas—the leadership  exhibited by the current Inspector General, Janet Rehnquist, the  productivity of the Office of Inspector General (OIG) in recent years, and  employee morale. To do our work, we became familiar with the  organization and structure of the OIG and many of its policies and  procedures related to its budgeting, work planning, and report processing  activities. We also examined its personnel practices and controls over  certain OIG operations. As part of our efforts, we interviewed over 200  current and former OIG employees—including the Inspector General—and  conducted a Web-based survey of all employees to obtain their views  about their work environment. We also interviewed two current and one  former inspectors general from other federal agencies to better  understand their unique role and the principles they embraced to manage  their offices.
Our review included the examination of more than 8,000 pages of  documents, including material related to the OIG’s general policies and  procedures, human resource management, productivity measures, and  reporting standards. Many of these documents were given to us by OIG  managers and other employees. In addition, we requested—and were  given access to—the e-mail accounts of eight senior OIG managers. This  enabled us to retrieve selected messages that these individuals sent or  received for approximately a 6-month period on a wide variety of topics  affecting the management of the office. We also obtained documentation  from other organizations, including the President’s Council on Integrity  and Efficiency (PCIE), which recently issued a report on some of the  Inspector General’s actions.
subsections: section_title: Interviews with Current and Former Employees
paragraphs: To obtain the views of OIG employees, we conducted a series of  semistructured interviews. These interviews relied on open-ended  questions regarding the Inspector General’s leadership, productivity,  morale, and other OIG operations. We interviewed three categories of  employees—those who were selected randomly, those who volunteered  for interviews, and those we selected because of their knowledge or  position within the OIG.
The randomly selected staff were chosen for interviews from five of the  OIG’s eight regional offices as well as employees in OIG headquarters. This  provided us with a broad geographic representation of OIG employees.  Our regional interviews were conducted in Atlanta, Boston, Chicago,  Dallas, and San Francisco. In order to afford confidentiality to  interviewees, we conducted our regional interviews in GAO offices in  those cities or in other non-OIG space. Some regional interviews were also  conducted by telephone. Headquarters staff were given the option of being  interviewed in either the OIG headquarters or GAO headquarters building.
At each of the five regional offices we visited, we interviewed  approximately 20 randomly selected employees who ranged from the GS-7  through the GS-15 levels. One hundred and six randomly selected regional  staff members were interviewed in total. Interviewees were selected using  a stratified, random sampling technique. Employees from the Office of  Audit Services (OAS), the Office of Investigations (OI), and the Office of  Evaluation and Inspections (OEI) were included in our random interviews  at each regional location. We also interviewed 32 randomly selected staff  from the OIG’s headquarters in Washington, D.C. and in nearby field  offices, including those in Baltimore, Columbia, and Rockville, Maryland.
To supplement our random interviews and to enhance identification of  issues of concern to all OIG employees, regardless of their location, we  invited all employees, through an OIG officewide e-mail, to contact us if  they wished to participate in an interview. We received 28 requests for  interviews and conducted many of these by telephone. We generally used  the same set of questions that were posed during the random interviews.
In both the random interviews and in discussions with those employees  who requested to be interviewed, we asked individuals to bring to our  attention any topic that they felt was noteworthy but which our questions  did not address. Some interviewees provided us with supporting  documentation that they felt was relevant. In some instances, interviewees  were reluctant to provide us with documentary evidence and were also  concerned about confidentiality. In these situations, we attempted to  corroborate the information they shared with us through other means,  without jeopardizing their confidentiality.
As our work progressed, we identified a number of individuals whom we  believed would be able to supply us with important information in areas  we had identified as potential areas of concern, including the  independence of the Inspector General, turnover among senior OIG  personnel, and changes in productivity and morale. In total, we  interviewed 44 such individuals, many of whom were current or former  OIG employees with first-hand knowledge about issues central to our  review.
section_title: Evaluation of the Inspector General’s Independence
paragraphs: To determine the extent to which policies and procedures were in place to  ensure that all OIG employees maintained a high degree of independence,  we reviewed existing OIG policies, procedures, and protocols. We also  reviewed guidance issued to the Inspector General community by the  PCIE and the Government Auditing Standards pertaining to independence.  We also discussed the OIG’s protocols for responding to requests for  information or assistance from external entities with selected current and  former senior-level OIG officials. In addition, we obtained information  regarding specific instances concerning the Inspector General’s  independence from interviews with current and former OIG officials as  well as the Inspector General.
section_title: Review of Personnel Information
paragraphs: To evaluate recent personnel changes among OIG officials, we examined  detailed personnel information for 24 current or former OIG employees  who had resigned, retired, been reassigned, or promoted during the  Inspector General’s tenure. We reviewed the official personnel files for  these individuals and collected relevant information including their history  of government service; time employed by the OIG; and any awards,  bonuses, and letters of commendation that they had received. We also  reviewed the performance appraisals these individuals had received for  the prior 3 years.
Finally, we reviewed documentation specifically concerning the  promotion of an OIG staff member to the position of Director of Public  and Congressional Affairs. Among other things, we examined relevant  position descriptions, job announcements, and e-mail communications.
We also interviewed OIG officials regarding this and other personnel  decisions made during the Inspector General’s tenure.
section_title: Examination of the Inspector General’s Travel
paragraphs: To understand the purpose, frequency, and duration of the Inspector  General’s travel, we examined the itineraries, travel orders, and travel  vouchers for all of the trips she had taken from August 2001 through  November 2002. For trips for which the itineraries lacked sufficient  information about the Inspector General’s business activities, we  requested additional information and discussed these trips with the  Inspector General. We also identified all OIG employees that accompanied  her when she traveled. We obtained similar travel records for two senior  staff members who accompanied the Inspector General on several  occasions and discussed their roles during these trips with them.
section_title: Analysis of OIG Performance Measures
paragraphs: To determine whether the OIG has experienced any changes in  productivity since the current Inspector General took office in August  2001, we reviewed OIG publications, such as its semi-annual reports, to  determine how savings, recommendations, and other performance  indicators changed since fiscal year 2000. From OAS and OEI, we  collected data about the number of projects initiated, reports published,  and reports canceled in fiscal year 2002. We compared these data to the  number of reports that were initiated, published, and canceled from fiscal  years 2000 and 2001—before the current Inspector General’s tenure.
To measure productivity in OI and OCIG, we reviewed data on  investigations, prosecutions, and convictions, and exclusions from fiscal  year 1997 through fiscal year 2002. We also examined relevant monetary  accomplishments including the number and amounts of fines and penalties  assessed, civil settlements and judgments, cost savings claimed, and  recoveries and court-ordered restitutions. Our review included an  examination of OCIG files pertaining to eight civil monetary penalty cases.  We also judgmentally selected 18 corporate integrity agreements instituted  since fiscal year 2000, to determine the extent to which new policies  outlined in the Inspector General’s November 20, 2001, open letter to  providers had been implemented.
In addition, we discussed the OIG’s productivity with some of its partners  in the law enforcement community to determine whether there have been  recent changes in the level of OI’s or OCIG’s support. Specifically, we  spoke to officials from the Department of Justice and seven of its U.S.  Attorneys’ Offices. We also discussed this matter with officials from  Medicaid Fraud Control Units in California, Florida, Illinois, and New York  and a representative from the National Association of Medicaid Fraud  Control Units.
Finally, we assessed the OIG’s productivity in terms of its outreach and  education activities. To do this, we collected information regarding the  number of speeches, presentations, and testimonies given by various OIG  employees. We also discussed this matter with OIG employees and  professional staff members at several congressional committees with  jurisdiction over Medicare and other federal health programs.
section_title: Analysis of Web-Based Survey Results
paragraphs: To elicit broad-based views of OIG employees on morale and other issues,  we conducted a Web-based survey. We solicited OIG employee  participation by e-mail, using an e-mail list provided by the OIG. We first  sent a notification e-mail alerting the employees to the upcoming survey  and to check for inaccurate e-mail addresses. We verified with the OIG  that the individuals whose e-mails were returned as “not deliverable” were  no longer active OIG employees. We then sent an activation e-mail to each  employee, containing a unique user name, password, and instructions for  accessing the survey on the GAO Web site. We sent three follow-up  reminder e-mails to nonrespondents. Employees were given 1 month to  complete the survey. Of the 1,621 employees on our list, 1,451 completed  the survey for a response rate of 90 percent.
The survey contained 29 items asking employees for their views on the  organization, management, and their personal job satisfaction. The four  possible responses were: strongly agree, somewhat agree, somewhat  disagree, and strongly disagree. The first 26 items on the survey were  identical to those from an employee survey conducted by the OIG in  January 2002, which we used as a basis for comparing our survey results.  We included three additional items: “Overall, the OIG is improving as a  place to work and make a difference,” “I have confidence and trust in my  organization,” and “In the last 15 months, morale in my work group has  improved.” We also included seven demographic items and provided an  open-ended comment box. We included a final item for the respondent to  mark the survey as “Completed,” which, if checked, indicated that the  respondent gave us permission to include his or her responses in our  analyses.
In total, 578 of the 1,451 survey respondents (40 percent) elected to write  open-ended comments. We coded 573 of the comments for tone (positive,  negative, neutral) and content. To code content, we used 36 categories  related to morale, productivity, management, personnel issues,  independence, propriety, and other topics. The comments of three  respondents were not coded because they did not fit into any of our  coding categories. The comments of two additional respondents were not  coded because they did not mark their surveys as “Completed.” The unit of  analysis was the comment—not the respondent. For example, if one  respondent made several comments that fell into different categories, each  comment was coded separately.
section_title: Appendix II: Insufficient Internal Controls Over the OIG’s Credentialing System
paragraphs: In response to allegations that certain employees, including the Inspector  General, possessed improper credentials, we evaluated the security of the  OIG’s credentialing system. OIG employees are issued credentials that  display their photographs, signatures, job titles, and, in the case of OI  investigators, their status as law enforcement officers. Because adequate  internal controls are key to preventing mismanagement and operational  problems, our evaluation centered on the controls governing this  computer-based system, physically located in the OIG headquarters  building. In addition, recent advances in information technology have  heightened the importance of ensuring that controls over electronically  stored information are frequently reviewed and updated to minimize the  threat of improper use. Changes in information technology led to revisions  in Standards for Internal Controls in the Federal Government, which  became effective at the beginning of fiscal year 2000, to reflect new  guidance for modern computer systems. Our work revealed serious  weaknesses in the internal controls governing the OIG’s credentialing  system.
The physical security of the computer system used to produce credentials  was inadequate. The system was housed in a public file room with  unrestricted access. Because the room also contained a copier machine,  many individuals routinely entered the area. The system’s backup tapes  were located in an unlocked drawer in the credentialing system desk. In  addition, we also found the stock paper containing the agency’s insignia,  used in the production of all credentials, stored unlocked in a cabinet in  the same room.
In addition, we found deficiencies in the system itself, making it even more  vulnerable to misuse. For example, we found that neither the computer’s  screen saver nor the credentialing software programs on the computer  were password protected, and the employee photo and signature files  were not adequately protected. The system also did not have the capability  to create a history log or audit trail to identify past users. Given the  system’s unsecured location, we determined that the system itself was  easily susceptible to unauthorized access through the use of several  techniques, such as a device that could identify recent keystrokes to  capture the names of recent users and their passwords.
When we visited the credentialing room we found it empty, the computer  on, and the screensaver active. By touching the computer’s mouse we  were able to cancel the screensaver and observed an open record on  display. We found that we could access, copy, modify, and delete sensitive  files including employee photos, digital signatures, and personnel  information with little likelihood of detection or system recovery. It would  also have been possible to create a false, unauthorized set of credentials.  OIG officials have since told us that they have taken steps to correct these  weaknesses.
section_title: Appendix III: Comments from the Inspector General
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: Major contributors to this report were Enchelle D. Bolden, Helen  Desaulniers, Curtis Groves, Shirin Hormozi, Behn Kelly, Terry Richardson,  Christi Turner, and Anne Welch.