Health Care Fraud and Abuse Control Program: Indicators Provide Information on Program Accomplishments, but Assessing Program Effectiveness is Difficult
Released: 2013-10-30T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: GAO has designated Medicare and Medicaid as high-risk programs partly because their size, scope, and complexity make them vulnerable to fraud. Congress established the HCFAC program and provided funding to HHS and DOJ to help reduce fraud and abuse in Medicare and Medicaid.

GAO was asked to examine how HHS and DOJ are using funds to achieve the goals of the HCFAC program, and to examine performance assessments and other metrics that HHS and DOJ use to determine the program's effectiveness. This report (1) describes how HHS and DOJ obligated funds for the HCFAC program, (2) examines how HHS and DOJ assess HCFAC activities and whether key program outputs have changed over time, and (3) examines what is known about the effectiveness of the HCFAC program in reducing health care fraud and abuse.

To describe how HHS and DOJ obligated funds, GAO obtained financial information from HHS and DOJ for fiscal year 2012. To examine how HHS and DOJ assess HCFAC activities and whether key outputs have changed over time, GAO reviewed agency reports and documents, and interviewed agency officials. To examine what is known about the effectiveness of the HCFAC program, GAO conducted a literature review and interviewed experts.

In comments on a draft of this report, HHS noted examples of CMS's efforts to reduce health care fraud, though these examples were not included in the HCFAC return-on-investment calculation. Additionally, HHS and DOJ provided technical comments, which GAO incorporated as appropriate.

section_title: What GAO Found
paragraphs: In fiscal year 2012, the Department of Health and Human Services (HHS), HHS Office of Inspector General (HHS-OIG), and the Department of Justice (DOJ) obligated approximately $583.6 million to fund Health Care Fraud and Abuse Control (HCFAC) program activities. About 78 percent of obligated funds were from mandatory HCFAC appropriations (budgetary resources provided in laws other than appropriation acts), 11 percent of obligated funds were from discretionary HCFAC appropriations (budgetary resources provided in appropriation acts), and 12 percent were obligated funds from other appropriations that HHS, HHS-OIG, and DOJ used to support HCFAC activities. HCFAC funds were obligated to support a variety of activities, including interagency Medicare Fraud Strike Force Teams--which provide additional investigative and prosecutorial resources in geographic areas with high rates of health care fraud--located in 9 cities nationwide.

HHS, HHS-OIG, and DOJ use several indicators to assess HCFAC activities, as well as to inform decision-makers about how to allocate resources and prioritize those activities. For example, in addition to other indicators, the United States Attorneys' Offices use indicators related to criminal prosecutions, including the number of defendants charged and the number of convictions. Additionally, many of the indicators that HHS, HHS-OIG, and DOJ use--such as the dollar amount recovered as a result of fraud cases--reflect the collective work of multiple agencies since these agencies work many health care fraud cases jointly. Outputs from some key indicators have changed in recent years. For example, according to the fiscal year 2012 HCFAC report, the return-on-investment--the amount of money returned to the government as a result of HCFAC activities compared with the funding appropriated to conduct those activities--has increased from $4.90 returned for every $1.00 invested for fiscal years 2006-2008 to $7.90 returned for every $1.00 invested for fiscal years 2010-2012.

Several factors contribute to a lack of information about the effectiveness of HCFAC activities in reducing health care fraud and abuse. The indicators agencies use to track HCFAC activities provide information on the outputs or accomplishments of HCFAC activities, not on the effectiveness of the activities in actually reducing fraud and abuse. For several reasons, assessing the impact of the program is challenging. For example, it is difficult to isolate the effect that HCFAC activities, as opposed to other efforts such as changes to the Medicare provider enrollment process, may have in reducing health care fraud and abuse. It is also difficult to estimate a health care fraud baseline--a measure of the extent of fraud--that is needed to be able to track whether the amount of fraud has changed over time as a result of HCFAC or other efforts. HHS has a project under way to establish a baseline of probable fraud in home health care, and will determine whether this approach to estimating a baseline of fraud should be expanded to other areas of health care. Results from this project and other studies could provide HHS and DOJ with additional information regarding which activities are the most effective in reducing health care fraud and abuse, and could potentially inform agency decisions about how best to allocate limited resources.

section_title: Letter
paragraphs: GAO has designated Medicare and Medicaid as high-risk programs  because their size, scope, and complexity make them particularly   According to the Department of Health  vulnerable to fraud and abuse.and Human Services’ Office of Inspector General (HHS-OIG), common  health care fraud schemes include providers or suppliers billing for  services or supplies not provided or not medically necessary, purposely  billing for a higher level of service than that provided, and paying  kickbacks to providers for referring beneficiaries for specific services or to  certain entities. To help reduce fraud and abuse in health care programs,  including Medicare and Medicaid, Congress established the Health Care  Fraud and Abuse Control (HCFAC) program as a part of the Health  Insurance Portability and Accountability Act of 1996 (HIPAA). The  departments of Health and Human Services (HHS) and Justice (DOJ)  jointly administer the HCFAC program and, in fiscal year 2012, received  over $486 million in HCFAC appropriations. Several components within  HHS and DOJ receive appropriations to carry out HCFAC activities,  including the Centers for Medicare & Medicaid Services (CMS)—the  agency within HHS that administers Medicare, Medicaid, and the  Children’s Health Insurance Program (CHIP)—the HHS-OIG, and DOJ’s  components—the Civil, Civil Rights, Criminal, and Justice Management  divisions, the U.S. Attorneys’ Offices (USAOs), and the Federal Bureau of  Investigation (FBI).

By statute, HHS and DOJ are required to issue a joint report annually to  Congress on the amounts appropriated through the HCFAC program, and  the amounts recovered as a result of HCFAC activities. In fiscal year  2012, HHS and DOJ reported having won or negotiated over $3 billion in  health care judgments and settlements through the activities of the  HCFAC program. The agencies also reported obtaining additional  administrative penalties in health care fraud cases and proceedings as a  result of these activities. In fiscal year 2012, about $4.2 billion was  collected, a portion of which was deposited into the Medicare Trust Funds  as a result of health care judgments and settlements and administrative  penalties (including those that occurred before fiscal year 2012). We have  previously reported that although there have been convictions involving  multimillion dollar schemes that defrauded the Medicare program, there  are no reliable estimates of the amount of fraud in the Medicare program  or for the health care industry as a whole.and DOJ work to reduce health care fraud and abuse through the HCFAC  program, concerns have been raised about whether the HCFAC program  has been effective in reducing health care fraud and abuse.

Given these concerns, you asked us to examine how HHS and DOJ have  used their appropriations to achieve the goals of the HCFAC program,  and to examine performance assessments and other metrics HHS and  DOJ use to determine the HCFAC program’s performance and  effectiveness. This report (1) describes how HHS and DOJ obligated  funds for the HCFAC program; (2) examines how HHS and DOJ assess  HCFAC activities and whether key program outputs have changed over  time; and (3) examines what is known about the effectiveness of the  HCFAC program in reducing health care fraud and abuse.

For our review, we included agencies within HHS (including HHS-OIG)  and DOJ that received mandatory and discretionary HCFAC funding in  fiscal year 2012 whose activities are described in the annual HCFAC  report, and whose funding is included in the annual report’s return-on- investment calculation (which compares the amount of monetary results  to the federal government, such as funds returned to the Medicare Trust  Funds as a result of HCFAC activities, with the funding appropriated to  conduct those activities).

For CMS, we only included the HCFAC  funding that was included in the HCFAC return-on-investment  calculation. We excluded all of the remaining HCFAC funding that CMS  receives because it is not included in the HCFAC return-on-investment  calculation and generally supports program integrity activities in Medicare  Parts C and D, which are similar to the activities conducted under the  Medicare Integrity Program.

An obligation is a definite commitment that creates a legal liability of the government for  payment of goods and services ordered or received. Obligations can be paid immediately  or in the future.

We requested that HHS, HHS-OIG, and DOJ report their information within five  categories of expenses: (1) personnel compensation and benefits; (2) contractual services  and supplies (including rent, transportation, printing, and supplies); (3) acquisition of  assets; (4) grants; and (5) other expenses. In addition to fiscal year 2012, we obtained  information for fiscal years 2008 through 2011, which is included in appendix II.

HHS-OIG, and DOJ components used to support HCFAC activities.Additionally, we interviewed officials at HHS and DOJ components, and  reviewed agency documents to examine the process by which HHS and  DOJ have obligated HCFAC funds. We reviewed the data for any errors  and followed up with agency officials for clarification when necessary. On  the basis of these activities, we determined that these data were  sufficiently reliable for the purpose of our report.

To examine how HHS and DOJ assess HCFAC activities, and whether  key program outputs have changed over time, we interviewed officials  from HHS, HHS-OIG, and DOJ to obtain information on indicators  reported by their agencies. We asked these officials about indicators  listed in the HCFAC report, as well as other indicators that HHS, HHS- OIG, and DOJ components use to assess HCFAC activities. We also  collected information from agency officials about how they use the  indicators and other data analyses to determine how to target HCFAC  resources and prioritize activities. We reviewed agency documents,  including the fiscal year 2012 HCFAC report, agency annual and semi- annual reports, strategic plans, performance plans, congressional budget  justifications, and other reports to obtain information on HCFAC activities  that HHS, HHS-OIG, and DOJ components conducted. We reviewed the  return-on-investment calculation outlined in the HCFAC report to  determine what funding and amounts recovered are included, as well as  the method used to calculate the return-on-investment. whether key program outputs have changed from fiscal year 2008 to  2012, we reviewed current and past HCFAC reports. We selected outputs  from the annual HCFAC report to review, which the agencies consider to  be key program outputs. For this analysis, we also took account of other  funding (i.e., funds that agencies used to support HCFAC activities that  were not specifically appropriated for the HCFAC program). We also  interviewed agency officials regarding other factors that may have  contributed to changes in program outputs in specific years.

The return-on-investment calculation compares the amount of funding returned as a  result of HCFAC activities with the funding appropriated to conduct those activities.

To examine what is known about the effectiveness of the HCFAC  program in reducing health care fraud and abuse, we conducted a review  of relevant literature to identify measures used to assess the  effectiveness of law enforcement programs, challenges associated with  evaluating law enforcement programs, and the issues related to  establishing a baseline estimate of the type and extent of fraud needed to  measure progress over time. We included in our search both health care  fraud enforcement programs specifically and law enforcement programs  in general. We conducted literature searches in 44 online databases with  health care and/or law enforcement content containing peer-reviewed  publications and government reports to identify studies published from  January 2003 through March 2013 using health care fraud, law  enforcement, and performance measurement search terms. We  conducted a preliminary review of abstracts for over 300 articles and  selected 49 articles for closer review based on the following criteria: the  article (1) identified performance indicators to assess the effectiveness of  enforcement programs in general or health care fraud enforcement  programs specifically; (2) discussed establishing a health care fraud  baseline; or (3) identified challenges in evaluating law enforcement  programs. Additionally, we interviewed HHS and DOJ officials to obtain  information on the effectiveness of HCFAC activities and to determine the  status of efforts by a CMS contractor to establish a health care fraud  baseline. We also interviewed experts on health care fraud to discuss  strengths and limitations of measuring the effectiveness of health care  fraud enforcement programs, such as the HCFAC program.

We conducted this performance audit from September 2012 to  September 2013 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Health Care Fraud and Abuse Control Program
paragraphs: The HCFAC program was established under HIPAA to (1) coordinate  federal, state, and local law enforcement efforts to control fraud and  abuse associated with health plans; (2) conduct investigations, audits,  evaluations, and inspections of delivery and payment for health care in  the United States; (3) facilitate the enforcement of federal health care  fraud and abuse laws; (4) provide guidance to the health care industry in  the form of advisory opinions, safe harbor notices, and special fraud  alerts; and (5) establish a national database of adverse actions against  health care providers.

HIPAA requires that HHS and DOJ issue a joint annual report to  Congress that outlines the amounts returned to the Medicare Trust Funds  for the previous fiscal year under various categories, such as amounts of  criminal fines and civil monetary penalties—penalties for certain activities,  such as knowingly presenting a Medicare claim that is not medically  necessary. Additionally, HHS and DOJ are required to report the amounts  deposited into and expended from the Medicare Trust Funds to conduct  HCFAC activities during the previous fiscal year and the justification for  those expenditures. In addition to the mandatory appropriations provided  under HIPAA, which Congress increased in 2010, DOJ and HHS-OIG  have received discretionary funding through annual appropriations for the  HCFAC program since fiscal year 2009.

The annual HCFAC report includes a summary of the key HCFAC  activities that the agencies and their components carried out and provides  information on the outputs or outcomes of those activities. For example,  the report includes information on the amount of money returned to the  Medicare Trust Funds as a result of HCFAC activities. Additionally, the  report includes sections that describe the activities each agency and  component that received HCFAC funding conducted. These sections  provide information on the outputs of each component’s activities. For  example, DOJ’s USAO section highlights the number of new criminal  investigations initiated and the number of civil matters pending.

section_title: HCFAC Appropriations
paragraphs: HHS and DOJ receive funding from several appropriations to conduct  their HCFAC program activities. Figure 1 describes HCFAC  appropriations to HHS, HHS-OIG, and DOJ. Mandatory funds are  appropriated by HIPAA from the Medicare Trust Funds, and are available  until expended, meaning that the funds can be spent in other years. A  large portion of these funds are appropriated to HHS-OIG; the law  appropriates the remainder to both HHS and DOJ, which must determine  together how to allocate the funds—referred to as the wedge—between  the agencies.

In each fiscal year, beginning with fiscal year 2009, Congress  appropriated discretionary funding to DOJ and HHS-OIG to finance  activities conducted under the HCFAC program. In addition, Congress  also appropriated discretionary funds to CMS for program integrity  activities it conducts in Medicare and Medicaid, which was outside the  scope of our review. Although the FBI is a component of DOJ and was  allocated a portion of DOJ’s discretionary HCFAC funding (about   $3.4 million), the FBI also received mandatory funding under HIPAA to  conduct health care fraud and abuse activities. This mandatory funding  was appropriated from the general fund of the U.S. Treasury.

In addition to the HCFAC mandatory and discretionary funding that HHS,  DOJ, and its components receive, the agencies use funding from other  appropriations to support HCFAC activities. For example, HHS’s Office of  General Counsel (OGC) uses appropriations from HHS's General  Departmental Management appropriation to support its HCFAC activities.

section_title: Activities Conducted Under the HCFAC Program
paragraphs: HHS and DOJ components conduct a variety of activities under the  HCFAC program using mandatory and discretionary HCFAC funding.  Among other activities, HHS components identify and investigate fraud  through programs, including the Administration for Community Living’s  (ACL) Senior Medicare Patrol programs, which are designed to educate  and train Medicare beneficiaries to identify fraud. HHS’s OGC supports a  variety of program integrity work, including assisting DOJ on False Claims  Act cases.Pharmaceutical Fraud Program, which is designed to detect  pharmaceutical, biologics, and medical device fraud. CMS uses a portion  of HHS’s HCFAC funding to improve its financial oversight of the  Medicaid program and CHIP, and for a pilot project related to fraud in   HHS’s Food and Drug Administration (FDA) conducts the  community mental health centers. CMS also uses its portion of HCFAC  funding to support its efforts related to the Medicare Fraud Strike Force  (Strike Force) teams, which consist of investigators and prosecutors who  use advanced data analysis techniques to identify, investigate, and  prosecute potentially fraudulent billing patterns in geographic areas with  high rates of health care fraud.

HHS-OIG conducts a variety of activities to identify and reduce fraud,  waste, and abuse. For example, HHS-OIG assesses civil monetary  penalties and imposes other administrative penalties—such as excluding  individuals and entities from participating in federal health care  programs—against individuals and entities for certain types of conduct.  Each of HHS-OIG’s components receives HCFAC funding for the work it  conducts. Among other activities:

The Office of Investigations (OI) coordinates and conducts  investigations of allegations of fraud, waste, and abuse in Medicare  and Medicaid.

The Office of Evaluation and Inspections (OEI) conducts national  evaluations on issues related to preventing fraud, waste, and abuse,  and promoting economy, efficiency, and effectiveness of HHS  programs.

The Office of Audit Services (OAS) conducts independent audits of  HHS programs, grantees, and contractors.

The Office of Counsel to the Inspector General (OCIG) exercises the  authority to impose civil and administrative penalties related to health  care fraud, as well as issue advisory opinions.

The Office of Management and Policy (OMP) provides management,  guidance, and resources in support of the other HHS-OIG  components.

DOJ’s components have the primary role in enforcing U.S. laws related to  health care fraud and abuse, including both criminal and civil matters. For  example:

The Criminal Division prosecutes criminal health care fraud and leads  the Strike Force teams.

The Civil Division represents the U.S. in civil fraud matters, such as  False Claims Act cases and has the authority to bring criminal  charges under the Federal Food, Drug, and Cosmetic Act.

The USAOs litigate or prosecute civil and criminal health care fraud  cases in their 94 districts throughout the country and are part of the  Strike Force teams.

The Civil Rights Division enforces several laws related to cases of  abuse, substandard care, or needless institutionalization of certain  individuals.

The Justice Management Division (JMD) provides financial oversight  of the DOJ components.

The FBI serves as an investigative agency with jurisdiction in both  federal and private health insurance programs, and participates in  task forces and undercover operations to investigate health care  fraud.

Although the agencies and components conduct certain activities without  assistance from other agencies and components, HHS, CMS, HHS-OIG,  and DOJ—including the FBI—frequently collaborate to investigate and  prosecute fraud in federal health care programs. For example, HHS-OIG,  FBI, and DOJ investigators and prosecutors comprise Strike Force teams.  Table 2 in appendix I provides further detail on these activities.

section_title: Agencies Obligated $583.6 Million for HCFAC Activities in Fiscal Year 2012; Most Obligations Were for Personnel
paragraphs: In fiscal year 2012, HHS, HHS-OIG, and DOJ obligated approximately  $583.6 million to fund HCFAC activities. About 78 percent of obligated  funds were from mandatory HCFAC appropriations, 11 percent of  obligated funds were from discretionary HCFAC appropriations, and   12 percent of obligated funds were from other appropriations.the obligations for HCFAC activities were for personnel costs; some  agencies reported obligating funds for services under contract and  supplies. Additionally, HHS-OIG and DOJ obligated over 8 percent of  their HCFAC funds to support Strike Force teams located in 9 cities  nationwide.
subsections: section_title: HHS, HHS-OIG, and DOJ Obligated $583.6 Million in Fiscal Year 2012; 12 Percent of Obligated Funds Came From Other Appropriations
paragraphs: In fiscal year 2012, HHS, HHS-OIG, and DOJ reported $583.6 million in  obligations for HCFAC activities. This total includes obligations of  mandatory (about 78 percent) and discretionary (about 11 percent)  HCFAC appropriations and other appropriations not specific to the  HCFAC program (about 12 percent). HCFAC mandatory funds are  available until expended, while discretionary HCFAC funds are available  for 2 fiscal years. Other appropriations that agencies use for HCFAC  activities vary in how long they are available. Because agencies reported  in fiscal year 2012 obligating funds that were carried over from prior fiscal  years, and because agencies obligated funds from other appropriations  not specific to the HCFAC program, the obligations the agencies reported  for HCFAC activities in fiscal year 2012—$583.6 million—exceed the  HCFAC funds appropriated to the agencies for that year. For example,  HHS, HHS-OIG, and DOJ were appropriated $486.1 million in HCFAC  mandatory and discretionary funding for fiscal year 2012. However, for  fiscal year 2012, these agencies reported HCFAC obligations of   $583.6 million, including over $67 million in obligations of other  appropriations, as well as obligations of funds appropriated in prior fiscal  years.

In fiscal year 2012, DOJ incurred about 48 percent of the agencies’ total  HCFAC obligations (about $280.3 million), while HHS-OIG incurred about 44 percent ($258.8 million), and HHS incurred the remaining   8 percent ($44.4 million). See figure 2 for the distribution of HCFAC  obligations by appropriations type—HCFAC mandatory, HCFAC  discretionary, and other appropriations—by HHS, HHS-OIG, and DOJ’s  components for fiscal year 2012. See table 3 in appendix II for the  distribution of HCFAC obligations by appropriations type—HCFAC  mandatory, HCFAC discretionary, and other appropriations—for HHS,  HHS-OIG, and DOJ’s components for fiscal years 2008 through 2012.

A portion of the mandatory HCFAC appropriation that supports HHS and  DOJ’s HCFAC activities—or wedge funds—is allocated to each agency.  According to a HHS official, in fiscal year 2010, the departments reached  a standing agreement for the following allocations: approximately   38 percent for HHS and 62 percent for DOJ. Prior to fiscal year 2010, HHS and DOJ negotiated each year how to divide the wedge funds  between the two agencies, which a HHS official described as time- consuming.

HHS distributes its wedge funds to HHS components based on their  annual funding requests that the Secretary approves. In fiscal year 2012,  HHS distributed mandatory funding to ACL for the Senior Medicare Patrol  programs, OGC to support program integrity work of its clients, FDA to  support the Pharmaceutical Fraud Program, and CMS to support  Medicaid and CHIP financial specialists and a pilot project related to fraud  in community mental health center providers in Texas, Florida, and  Louisiana.HCFAC funds—its portion of wedge funds—to its components to carry out  their HCFAC activities, and the distribution of such funds has not varied  much since the inception of the program. Separately, HHS-OIG receives  a mandatory appropriation for its HCFAC activities. This appropriation is  HHS-OIG’s primary source of funding for Medicare and Medicaid fraud  investigations, as well as for audits, evaluations, and inspections it  conducts related to the Medicare and Medicaid programs.

According to a DOJ official, DOJ distributes mandatory  In fiscal year 2012, DOJ and HHS-OIG obligated discretionary HCFAC  appropriations. According to the information each agency reported to us,  each DOJ component received a share of DOJ’s discretionary HCFAC  appropriation for their HCFAC activities. A DOJ official told us that DOJ  components generally received the same amount of funding from the  agency’s discretionary HCFAC appropriation for their HCFAC activities in  fiscal year 2012 as they had in prior fiscal years. Additionally, the official  indicated that a large portion of DOJ’s HCFAC discretionary appropriation  supports the Strike Force teams because DOJ believes that these teams  reduce fraud. One component in HHS-OIG—OMP—received  discretionary HCFAC appropriations.obligations of these funds are for overhead expenses for the HHS-OIG  components that are handled by OMP (such as rent and utilities).

HHS, HHS-OIG, and DOJ components obligated over $67 million in funds  from other appropriations in addition to the mandatory and discretionary  HCFAC appropriations they obligated for HCFAC activities in fiscal year  2012. Within HHS, one component—OGC—used other appropriations to   To carry out its HCFAC activities, OGC  supplement its HCFAC funding. obligated funds from the annual HHS General Department Management  appropriation, which accounted for almost half of its overall obligations for  HCFAC activities in fiscal year 2012. ACL, CMS, and FDA did not use  other appropriations to support their HCFAC activities.

HHS-OGC’s reported estimated obligations of other appropriations, which also included  reimbursements for attorney services provided to OGC clients within HHS that supported  HCFAC activities.

Each of HHS-OIG’s components obligated funds from other  appropriations to support HCFAC activities in fiscal year 2012. From other  appropriations, HHS-OIG obligated about $18.9 million of these  appropriations for HCFAC activities in fiscal year 2012, which represented  about 7 percent of its overall HCFAC obligations. HHS-OIG reported that  the other appropriations used to support HCFAC activities included funds  appropriated specifically to support HHS-OIG’s Medicare and Medicaid  program integrity work. For example, in fiscal year 2012, each HHS-OIG  component reported obligating funds appropriated in section 6034 of the  Deficit Reduction Act (which, among other things, established the  Medicaid Integrity Program and provided HHS-OIG with increased  funding for Medicaid fraud and abuse control activities) to conduct  HCFAC activities.

Although some DOJ components reported obligating funds from other appropriations for  HCFAC activities, they also reported carrying over some of their HCFAC funding into other  fiscal years. A DOJ official told us that funds are often carried over to a new fiscal year,  such as in the situation of a continuing resolution, which may shorten the number of  months in which they are able to obligate the appropriated funds. work, such as to investigate qui tam cases alleging false claims and to  prepare cases for trial. The Civil Rights Division reported using DOJ's  Salaries and Expenses, General Legal Activities appropriation to fund the  rent for office space used by personnel, and the FBI reported using its  annual appropriation to cover personnel expenses for investigators  working health care fraud cases beyond those covered by HCFAC funds.

section_title: Most HCFAC Obligations Were for Personnel in Fiscal Year 2012
paragraphs: HHS, HHS-OIG, and DOJ reported that most of their HCFAC obligations  were for personnel costs in fiscal year 2012, with some exceptions based  on the type of HCFAC activities each component performs (see table 3 of  appendix II for HCFAC obligations for fiscal years 2008 through 2012 for  HHS, HHS-OIG, and DOJ’s components). A large portion of most HHS  components’ HCFAC obligations were for personnel costs. The same was  true for HHS-OIG and DOJ. Each agency relied on personnel to conduct  HCFAC activities—HHS-OIG employed investigators to examine potential  fraud cases and DOJ employed investigators, attorneys, and other  support personnel to investigate and prosecute fraud cases. Additionally,  HHS-OIG employed auditors and evaluators to study issues related to the  Medicare and Medicaid programs, including issues related to fraud in  these programs, as well as a variety of other issues.

HHS, HHS-OIG, and DOJ components also reported that their next  largest amount of HCFAC obligations was for contractual services and  supplies. Components reported using these contractual services and  supplies for transportation, rent, supplies, or other contractual services— such as for litigation consultants (for example, medical experts) and  litigation support (for example, paralegals to review case documentation),  among other things. Obligations for personnel and contracted services  and supplies generally accounted for almost all of a component’s HCFAC  obligations.

Specifically, for HHS’s components, obligations for personnel costs  represented the largest portion of FDA’s, CMS’s, and OGC’s obligations  for HCFAC activities for fiscal year 2012. In contrast, most of ACL’s  obligations in fiscal year 2012 were for expanding grants to the Senior  Medicare Patrol programs.

Each of HHS-OIG’s components, with the exception of OMP, reported  obligations for personnel costs as their largest HCFAC obligations for  fiscal year 2012, devoting 87 percent or more of their obligations to  personnel in fiscal year 2012. For OMP, over 70 percent of its obligations  were devoted to rent, communication, utilities, equipment, printing, and  other contractual services. OMP officials told us that certain overhead  expenses incurred by the HHS-OIG components—for example, rent  payments—are handled by OMP.

About half or more of DOJ components’ obligations for HCFAC activities  were for personnel costs. In fiscal year 2012, the USAOs, Civil Division,  Criminal Division, Civil Rights Division, and FBI reported that obligations  for personnel costs ranged from 47 percent (Civil Division) to 84 percent  (USAOs) of their obligations. For example, for the Civil Division,  obligations for contractual services and supplies represented 53 percent  of its HCFAC obligations; and officials told us that they use contracted  services for litigation consultants (such as medical experts to review  medical records or to prepare exhibits to be used at trial) and for litigation  support (such as paralegals to review case documentation).

section_title: Over $47 Million in Obligations in Fiscal Year 2012 Supported Strike Force Teams in Nine Cities
paragraphs: In fiscal year 2012, HHS-OIG and DOJ obligated over $47 million in  HCFAC funds to support Strike Force teams. This represented about   8.1 percent of the $583.6 million in obligations for HCFAC activities. DOJ  officials told us that Strike Force teams are an important and valuable tool  for identifying potential health care fraud schemes. (See table 1 for the  HCFAC obligations by Strike Force location for fiscal year 2012, and see  appendix II, table 4 for information on HCFAC obligations devoted to  Strike Force teams for fiscal years 2008-2012.)

In fiscal year 2012, DOJ and HHS-OIG obligated over $12.9 million for  the Strike Force team in Miami, which represented over 27 percent of  funding for all Strike Force teams. The first Strike Force team was  officially launched in Miami in fiscal year 2007, based in part on an HHS- OIG evaluation that found aberrant claims patterns for infusion therapy for  Medicare beneficiaries with HIV/AIDs that differentiated South Florida  Medicare providers and beneficiaries from the rest of the country.  Additionally, obligations for Miami’s Strike Force team were more than  twice as much as in Detroit, the team with the second highest obligations  for fiscal year 2012 ($5.1 million).

Based on the obligations reported for fiscal year 2012, HHS-OIG’s Office  of Investigations accounted for 45 percent of the total obligations used for  Strike Force teams. The FBI incurred 25 percent, DOJ’s Criminal Division  incurred 17 percent, and the USAOs incurred 13 percent of obligations for  the Strike Force teams. HHS-OIG’s Office of Investigations and the FBI’s  agents conduct investigations and gather evidence, such as through  surveillance for Strike Force cases, while DOJ’s Criminal Division and the  USAOs’ attorneys are the primary prosecutors of Strike Force cases.  Additionally, although not reflected in the table above, CMS obligated  approximately $350,656 in discretionary HCFAC appropriations to  support Strike Force Teams. CMS’s HCFAC obligations were not  associated with any one individual Strike Force city.

Since fiscal year 2010, the USAOs have used some of their HCFAC  discretionary appropriation for three Special Focus teams—in San  Francisco, Boston, and Philadelphia. These Special Focus teams are  similar to the Strike Force teams, but handle pharmaceutical civil cases  rather than criminal cases. Approximately $2.8 million of the USAOs’  HCFAC obligations in fiscal year 2012 were for these Special Focus  teams. This amount was in addition to the HCFAC obligations they used  for the Strike Force teams.

section_title: Agencies Use Several Indicators to Assess HCFAC Activities, and Some Key Outputs Changed Over Time
paragraphs: HHS, HHS-OIG, and DOJ use several indicators to assess HCFAC  activities as well as to inform decision-makers about how to allocate  resources. These indicators include those listed in the annual HCFAC  report as well as others outlined in agency reports. For example, FDA  assesses the work of its Pharmaceutical Fraud Program by tracking the  number of criminal investigations opened and the outcomes of criminal  convictions obtained, among other indicators. Additionally, many of the  indicators that HHS, HHS-OIG, and DOJ use reflect the collective work of  multiple agencies since they work many health care fraud cases jointly.  Outputs from some of these key indicators have changed in recent fiscal  years. For example, the return-on-investment has increased from $4.90  returned for every $1.00 invested for fiscal years 2006-2008 to $7.90  returned for every $1.00 invested for fiscal years 2010-2012.
subsections: section_title: HHS, HHS-OIG, and DOJ Use Several Indicators to Assess HCFAC Activities and Inform Decisions about Resource Allocation and Prioritization of Activities
paragraphs: HHS, HHS-OIG, and DOJ officials reported using several indicators to  assess HCFAC activities and that those indicators serve multiple  purposes. Several indicators are included in the annual HCFAC report,  while other indicators are reported in agency documents or used  internally. Additionally, some indicators are collective—in that they reflect  the work of multiple agencies—and other indicators outline the activities  conducted by a particular agency or component. Appendix III, tables 5  through 8, provides detailed information on indicators used to assess the  activities conducted using HCFAC funding, including those outlined in the  HCFAC report, as well as other indicators the agencies use, by agency  and component.

Each HHS component conducts unique activities related to health care  fraud and abuse. As a result of these different types of activities, the  indicators that each HHS component uses to highlight the  accomplishments of its HCFAC activities vary.

FDA uses indicators associated with its Pharmaceutical Fraud program— which focuses on detecting, prosecuting, and preventing pharmaceutical,  biologic, and medical device fraud—including the number of criminal  investigations opened during a fiscal year and the outcomes of criminal  convictions obtained (such as amount of jail time, probation, or amount of  restitution). FDA officials told us that the indicators they use are outlined  in the annual HCFAC report. For example, FDA reported in the fiscal year  2012 HCFAC report that it had opened 42 criminal investigations since  the inception of the Pharmaceutical Fraud Program, and 17 investigations  during fiscal year 2012.

ACL primarily uses indicators that track information related to the Senior  Medicare Patrol (SMP) programs—which train senior volunteers to inform  fellow beneficiaries on how to detect and prevent fraud, waste, and abuse  in the Medicare program—such as indicators related to beneficiary  education and training, outreach activities, and events the SMP programs  conduct, and cases that were referred for investigation. For instance, ACL  tracks the number of group education sessions the SMPs conduct and  the estimated number of beneficiaries who attended the sessions. Many  of the indicators ACL uses are outlined in an annual HHS-OIG report on   According to  the SMP programs, as well as the annual HCFAC report.ACL officials, ACL has hired a contractor to assess the adequacy of the  current indicators used by ACL and to determine if the indicators are  appropriate for evaluating the performance of the SMPs.

HHS’s OGC uses several indicators to assess the HCFAC activities it  conducts. These indicators include amounts of recoveries for matters on  which OGC has assisted—such as False Claims Act matters and civil  monetary penalties—and the number of physician self-referral disclosures  in which OGC advised. indicators are outlined in the annual HCFAC report.

According to the fiscal year 2012 HCFAC report, OGC advised CMS on the new  voluntary Self Referral Disclosure Protocol established by the Patient Protection and  Affordable Care Act. Pub. L. No. 111-148, § 6409(a), 124 Stat. at 772. Under this protocol,  providers of services and supplies may self-disclose actual or potential violations of the  physician self-referral law, commonly known as the Stark law. The Stark law prohibits  physicians from making certain referrals for “designated health services” paid for by  Medicare to entities with which the physician (or immediate family members) has a  financial relationship, unless the arrangement complies with a specified exception, such  as in-office ancillary services. 42 U.S.C. § 1395nn(a)(1), (b)(2). officials told us that one indicator they use is the drop in number of claims  for particular services, which they believe coincides with the efforts of the  Strike Force teams to investigate and prosecute fraud. For example,  according to information that CMS provided to us, payments for home  health services dropped by nearly one-half from 2008 to 2011 in Miami- Dade County, which officials believe was, in part, due to the Strike Force  team’s efforts focused on reducing fraud in home health care.

HHS-OIG uses a variety of indicators to assess the work it conducts using  HCFAC funds. Some of these indicators reflect the collective work of  HHS-OIG’s components and some are unique to the activities conducted  by a particular component. For example, HHS-OIG tracks the health care  savings attributable to HHS-OIG investigations, audits, and evaluations.  This indicator includes work from nearly all HHS-OIG components,  including the Office of Investigations, the Office of Audit Services, and the  Office of Evaluation and Inspections. Among many other indicators, HHS- OIG’s Office of Counsel to the Inspector General tracks the number of  corporate integrity agreements monitored for compliance, which is  specific to the work of that office. HHS-OIG officials told us that the  indicators they use to assess HCFAC activities are reported in the annual  HCFAC report and in other HHS-OIG reports (such as its semi-annual  reports to Congress).

DOJ uses several indicators to assess the work it conducts with HCFAC  funding. The indicators it uses relate to the activities that each DOJ  component conducts to enforce health care fraud and abuse laws. For  example, the USAOs use indicators related to criminal prosecutions,  including the number of defendants charged and the number of  convictions. In addition to those measures, the USAOs also track  information related to civil matters, such as the number of pending civil  investigations.

In addition to the indicators listed in the annual HCFAC report, officials  from DOJ’s components told us that they use other indicators to assess  the work they conduct related to health care fraud and abuse. Officials  told us that these indicators are tracked at the departmental level and  aggregate the work of multiple DOJ components. For example, DOJ  tracks the percentage of criminal and civil cases resolved favorably.  These indicators include health care fraud cases, as well as other cases  that DOJ components handle.

Officials from HHS, HHS-OIG, and DOJ told us that they use indicators to  inform decision-makers about how to allocate resources. For example,  officials from DOJ’s Civil Rights Division told us that they use indicators to  help determine what resources they need to handle their current  caseload. The Civil Rights Division considers the number of cases the  division is currently working along with the number of remedial  agreements with facilities that the division needs to monitor in the  upcoming year when developing requests for funding. Additionally,  officials from FDA told us that they review the preceding year’s number of  investigations and the costs associated with those investigations, when  requesting annual funding.

Additionally, HHS, HHS-OIG, and DOJ officials indicated that they use  data to inform their decisions about which activities to prioritize, including  what cases or studies to undertake, as well as where to locate specific  resources. For example, officials from HHS-OIG told us that they use  Medicare claims data to identify which service areas to target for  investigations, audits, or evaluations, as well as which geographic regions  to focus their efforts. Officials said that they continually review whether  HHS-OIG staff are located in the most appropriate geographic areas and  have relocated staff to areas to enhance the efficiency of HHS-OIG  resources. HHS-OIG officials also told us that the agency uses several  indicators for internal management purposes. Additionally, officials from  DOJ’s Criminal Division told us that one factor they consider when  deciding how to prioritize cases is to review data analyses to focus on  cases with large amounts of alleged fraudulent billing.

section_title: Some Key Outputs that Reflect Work of Multiple Agencies Have Changed in Recent Years
paragraphs: Since HHS-OIG and DOJ’s components work many health care fraud  cases jointly, many of the indicators included in the annual HCFAC report  highlight the work of both HHS-OIG and DOJ, as well as various  components within each agency. For example, the report includes  information on the results of HCFAC activities, such as the dollar amount  recovered as a result of fraud cases, which HHS-OIG and DOJ officials  say reflects the investigative work done by HHS-OIG and FBI, as well as  the work of DOJ’s components in prosecuting the cases. Additionally, the  report presents several indicators related to the work of the Strike Force  teams, such as the number of indictments and complaints involving  charges that were filed, the outcomes of the cases, and the total amount  of alleged billing to Medicare as a result of these Strike Force cases.

The return-on-investment is another indicator that reflects the work of  multiple agencies and has changed in recent years. We have recognized  that agencies can use a return-on-investment as a valuable tool for  assessing a program’s activities and for determining how best to target  resources. The return-on-investment is included in the annual HCFAC  report and compares the amount of funds that were returned to the  Medicare Trust Funds, such as restitution and compensatory damages  awarded, with the amount of appropriations for HCFAC activities.  Specifically:

The total returns—the numerator—includes deposits to the Medicare  Trust Funds. The calculation includes amounts that were deposited  into the Medicare Trust Funds rather than amounts that were ordered  or negotiated in health care fraud and abuse cases, but not yet  transferred to the Medicare Trust Funds. Officials reported that  although there may be large amounts of restitution ordered or agreed  upon in health care fraud cases, the amounts actually returned to the  Medicare Trust Funds may be lower. By including only those  funds that have been returned to the Medicare Trust Funds, the  return-on-investment is not artificially inflated.

For example, officials told us that although a defendant convicted of health care fraud  may be ordered to pay restitution and penalties in a specific amount, the defendant may  pay less than what is ordered as the ability to pay often affects how much is actually  received.

Many cases discussed in the annual HCFAC report include settlements reached with  pharmaceutical and device manufacturers for criminal and civil liabilities. For example, the  fiscal year 2012 HCFAC report describes many settlements reached with pharmaceutical  and device manufacturers and the settlements ranged from about $200,000 to $3 billion.

The total investment—the denominator—includes mandatory and  discretionary HCFAC funds that were appropriated to HHS, HHS-OIG,  and DOJ (including the FBI’s mandatory funds devoted to health care  fraud and abuse reduction activities) and does not include funding  from other appropriations. DOJ officials told us that the HCFAC  funding that CMS receives through HHS’s wedge fund is included in  the return-on-investment calculation, and a small portion of HCFAC  discretionary funds that CMS uses to support the Strike Force  teams.

Return-on-investment is calculated using a 3-year moving average.  To account for differences in the amounts returned to the Medicare  Trust Funds between years, the return-on-investment is calculated  using a 3-year average. For example, a case may have been  investigated in fiscal year 2010 but not settled until fiscal year 2012,  and thus the funds received from that case would not be deposited  until 2012. Similarly, although agencies may carry over HCFAC  appropriations into future fiscal years, the amount of appropriations  included in the calculation is also based on a 3-year average with  carry over amounts included in the year in which they were  appropriated.

According to the annual HCFAC report, the return-on-investment for fiscal  years 2010-2012 was $7.90 returned to the Medicare Trust Funds for  every $1.00 of HCFAC funds appropriated for HCFAC activities. The  return-on-investment increased steadily from fiscal year 2008 to 2012. In  fiscal years 2006-2008, the return-on-investment was $4.90 to $1.00, and  in fiscal years 2010-2012, the return-on-investment was the highest at  $7.90 to $1.00. See figure 3 for additional information on the return-on- investment for fiscal years 2008-2012.

A review of other key outputs listed in the annual HCFAC reports from  2008 through 2012 that reflect accomplishments or outputs of activities  conducted by multiple agencies using HCFAC funding shows some key  outputs have generally increased and some have remained stable. During  the same time period, HCFAC obligations and funding from other  appropriations used to support HCFAC activities increased about   38 percent. See figure 4 for data on selected key outputs for fiscal years  2008 to 2012, and see appendix IV, table 9 for additional detailed  information on the key outputs for fiscal years 2008 to 2012.

One key output that has increased since fiscal year 2008 is the number of  defendants convicted of health care fraud. For example, the number of  defendants convicted of health care fraud generally increased from  around 588 in fiscal year 2008 to 826 in fiscal year 2012 (a 40 percent  increase).

Some key outputs did not change between fiscal years 2008 and 2012.  While funding has increased since 2008, there has not been a consistent  pattern of increasing outputs. For example, the number of new criminal  health care fraud investigations opened increased from fiscal year 2008  (957 investigations) to fiscal year 2012 (1,131 investigations).  Additionally, the number of new civil health care fraud investigations  opened did not vary much between 2008 (843 cases) and 2012   (885 cases).

HHS-OIG and DOJ officials indicated that there are a number of factors  that might contribute to these trends. DOJ officials told us that the  complexity of fraud cases has increased in recent years and requires  more substantial resources to investigate and prosecute than other, less- complex cases. Officials stated that this limits the amount of resources  they are able to commit to other cases. HHS-OIG and DOJ officials also  cited other factors, including external factors (such as an increase in the  number of defendants opting to go to trial) and significant changes to  federal health care programs (such as the implementation of the  Medicare Part D prescription drug program), which might influence these  trends.

Nonetheless, HHS-OIG and DOJ officials indicated that they consider the  increase since 2008 in some of the key outputs to be significant. For  example, HHS-OIG officials noted that there was an increase of 42 civil  fraud investigations from 2008 to 2012, and they consider the increase to  be of significance given the complexity of fraud schemes and the  resources needed to handle these civil cases. Additionally, DOJ officials  told us that they consider increases to the number of new criminal fraud  investigations opened (an increase of 18 percent) to be significant. DOJ  officials also indicated that several key outputs related to the Strike Force  teams have increased since 2008. See appendix IV for detailed  information on key outputs related to HCFAC activities, including the  Strike Force teams.

section_title: Several Factors Contribute to Lack of Information about the Effectiveness of HCFAC Activities
paragraphs: The indicators used by agencies to track the outputs of HCFAC activities  provide information on the accomplishments of HCFAC activities, not on  the effectiveness of the activities in reducing health care fraud and abuse.  HHS, HHS-OIG, and DOJ officials reported that they consider the  indicators to be the outputs or accomplishments of the HCFAC activities  they conduct and in that sense they provide a composite picture of the  achievements of the HCFAC program. However, difficulty in establishing  a causal link between HCFAC activities and output indicators, difficulty in  determining the deterrent effect HCFAC activities may have on potential  health care fraud and abuse, limited research on the effectiveness of  health care fraud interventions, and the lack of a health care fraud  baseline hinder a broader understanding of the effectiveness of the  HCFAC program in reducing health care fraud and abuse.
subsections: section_title: Indicators Agencies Use to Assess HCFAC Activities Provide Information on Accomplishments, but Not Effectiveness
paragraphs: The indicators that HHS, HHS-OIG, and DOJ use to track HCFAC  activities offer insights on the accomplishments and outputs of HCFAC  activities, but they do not measure the effectiveness of the HCFAC  program in reducing health care fraud and abuse. HHS, HHS-OIG, and  DOJ officials reported that they consider the indicators they use to be the  accomplishments or outputs of the HCFAC activities they conduct. For  example, the key program outputs discussed earlier in this report reflect  accomplishments of activities agencies conduct using HCFAC funding.  Officials from HHS, HHS-OIG, and DOJ told us that these indicators can  be used to provide insights on program activities or the number of actions  a component has been able to accomplish in a specific time frame   (e.g., the number of defendants convicted in a fiscal year). However,  several HHS and DOJ agency officials told us that they do not consider  these indicators to be measures of the performance or the effectiveness  of the HCFAC program in reducing health care fraud. The return-on- investment is an example of an indicator that describes program results  but does not measure program effectiveness. We found that the return- on-investment provides information on the accomplishments of HCFAC  activities in relationship to the amount of funds appropriated for these  activities, but does not provide information on the extent to which the  HCFAC program reduces health care fraud.

Additionally, most of the indicators used to track HCFAC activities do not  have targets or goals associated with them. Although standard practices  for internal controls indicate that ongoing performance monitoring should  include comparison of performance indicator data against planned  targets, our previous work has recognized that establishing measures and  setting specific targets in the law enforcement area can be challenging.  Officials from HHS, HHS-OIG, and DOJ told us that they intentionally do  not set performance targets for indicators such as the number of health  care fraud investigations or prosecutions undertaken because such  targets could cause the public to perceive law enforcement as engaging  in “bounty hunting” or pursuing arbitrary targets merely to meet particular  goals.law enforcement actions that are based on merit and avoid the  appearance that they strive to achieve certain numerical quotas.

section_title: Several Factors Make Assessing the Effectiveness of the HCFAC Program Challenging
paragraphs: HHS, HHS-OIG, and DOJ officials, as well as literature we reviewed,  indicate that there are several factors that make assessing the  effectiveness of the HCFAC program in reducing health care fraud and  abuse challenging.

It is difficult to establish if the HCFAC program has a direct relationship to  changes in the amount of health care fraud and abuse. HHS, HHS-OIG,  and DOJ officials told us that HCFAC activities—as well as other efforts  by federal agencies and others, including non-government entities—may  have helped reduce health care fraud; however, the effect that any of  these actions may have had on health care fraud and abuse is difficult to  isolate. For example, HHS-OIG officials stated that compliance training  and guidance provided by the HHS-OIG to health care organization  directors—an activity conducted with HCFAC funding—may have had an  effect on health care fraud but that it is difficult to isolate how much of an  effect the activity has had. However, according to HHS-OIG officials, a  rise in the number of provider compliance programs established by  hospital organizations in response to shareholder interest in improving  compliance with federal and state health care program requirements may  also contribute to reductions in health care fraud. Moreover, many efforts  within CMS aim to reduce health care fraud and abuse, in addition to  those identified as HCFAC activities, and it is difficult to know which CMS  program or activity has had an effect on the incidence of fraud. For  example, CMS has implemented a number of initiatives to prevent health  care fraud and abuse that are not funded with HCFAC funds. One such  effort is a change to the provider enrollment process, which is designed to  better ensure that only legitimate providers and suppliers are allowed to  bill Medicare. However, it is difficult to isolate the effect that either HCFAC  activities or broader CMS efforts may have had in reducing health care  fraud and abuse.

Another factor that limits understanding of the effectiveness of the  HCFAC program in reducing health care fraud and abuse is the difficulty  in quantifying the HCFAC program’s effect in deterring health care fraud  and abuse. DOJ officials provided anecdotal evidence that HCFAC  activities help to deter would-be offenders. For example, a Justice  Management Division official asserted that DOJ prosecutions that result  in doctors being sentenced to prison for health care fraud and abuse  deter other doctors who are contemplating committing fraud. Other DOJ  officials reported that cooperating witnesses in health care fraud  investigations have told officials of instances where a provider committing  potentially fraudulent acts had ceased operations because of the  pressure brought on by Strike Force prosecutions. DOJ officials stated  that they could recall about a dozen examples of specific individuals who  have said they were deterred from committing fraud or ceased a  fraudulent operation because they saw another individual get caught.  However, these examples are anecdotal and DOJ and HHS-OIG officials  stated that it is difficult to know how much health care fraud is deterred as  a result of HCFAC activities.

Research on the effectiveness of health care fraud and abuse  interventions, and on ways to measure the effectiveness of health care  fraud and abuse interventions has been limited. We found that none of  the 49 articles we selected to review for this study evaluated the  effectiveness of the HCFAC program specifically, and few studies  examined the effectiveness of health care fraud and abuse interventions  in general. A recent review of literature conducted by experts in the field  found similar results.

Another challenge that limits the ability to determine whether HCFAC  activities are effective in reducing health care fraud and abuse is the lack  of a baseline for the amount of health care fraud that exists at any point in  time. Having such a baseline could provide information on the amount of  health care fraud and how much it has changed in a given year or over  time. We have previously reported that there currently is no reliable  baseline estimate of the amount of health care fraud in the United  States. Several experts told us or have written about the importance of  establishing a baseline in assessing the effectiveness of law enforcement  programs. A baseline estimate could provide an understanding of the  extent of fraud and, with additional information on program activities,  could help to inform decision-making related to allocation of resources to  combat health care fraud.

HHS and CMS have taken steps to try to establish a health care fraud  baseline because, according to the fiscal year 2012 HCFAC report, they  appreciate that a baseline would allow the agencies to evaluate the  success of fraud prevention activities. HHS officials stated that the  Assistant Secretary for Planning and Evaluation initiated work to establish  a baseline measurement, and that work was subsequently transferred to  CMS’s Center for Program Integrity. According to the fiscal year 2012  HCFAC report, the project is designed to measure probable fraud in  home health care agencies and will pilot test a measurement approach  and calculate an estimate of probable fraud for specific home health care  services. CMS and its contractor will collect information from home health  care agencies, the referring physicians, and Medicare beneficiaries  selected in a national random sample of home health care claims. The  pilot will rely on the information collected along with a summary of the  service history of the home health care agency, the referring provider,  and the beneficiary to estimate the percentage of total payments that are  associated with probable fraud, and the percentage of all claims that are  associated with probable fraud for Medicare fee-for-service home health  care. CMS reports that after completion of the pilot, it will determine  whether the measurement approach should be expanded to other areas  of health care. Officials from the Center for Program Integrity stated that  as of May 2013, they were beginning the data collection phase of the  fraud baseline measurement pilot, which they expect will last two years.

Some HCFAC-funded agencies have attempted to determine the effect of  HCFAC activities on specific types of fraud in certain locations. DOJ  officials provided examples of reductions in billings for certain services in  specific locations and told us that they believe these reductions are  associated with the work of the Strike Force teams. For example, DOJ  officials reported assessing the amount of home health care billings in  certain Strike Force cities before the Strike Force began operations and  then again after the Strike Force had begun operations. Since the  amount of home health care billing was measured before and after the  Strike Force was implemented, HHS, HHS-OIG, and DOJ officials are  able to estimate some effect that the Strike Force team had on the  amount of billing in that area. For example, in a May 14, 2013 press  conference, the Attorney General noted that after the Detroit Strike Force  began investigating cases of potential group-psychotherapy fraud, claims  for this type of treatment in Detroit dropped by more than   70 percent since January 2011.

section_title: Concluding Observations
paragraphs: Making progress in preventing and reducing health care fraud and abuse  is an essential yet challenging task. HHS and DOJ use a number of  indicators to assess the activities they conduct to reduce health care  fraud and abuse. However, the indicators do not provide information  about the effectiveness of the program, and little is known about whether  and how well the HCFAC program reduces health care fraud. While  positive results on the program’s return-on-investment can be seen as an  indication of program success, the return-on-investment does not indicate  the extent to which the program is reducing fraud. For example, the  increasing returns from the fraud that is being investigated and  prosecuted may indicate that HCFAC programming is effective in  detecting or deterring potentially fraudulent schemes or indicate that there  is simply an increase in potentially fraudulent activity. CMS’s recent  efforts to establish a home health care fraud baseline is a good first step  to understanding the extent of the problem and, if implemented as  planned, could provide policymakers with information on how much fraud  exists and in coming years, how potentially fraudulent activity has  increased or decreased over time. However, CMS has not yet determined  whether the methodology used to establish a baseline of probable fraud  in home health care could be used to assess the amount of fraud in other  health care services. Additionally, even with a baseline estimate of the  total amount of probable fraud, there will likely be continuing challenges in  understanding the effectiveness of the HCFAC program, such as isolating  the program’s ability to reduce or prevent fraud and abuse. Despite these  inherent challenges, if a health care fraud baseline is established more  broadly, it may become feasible to study how individual HCFAC activities,  and possibly the program as a whole, affects changes in health care  fraud. Results from these studies could provide HHS and DOJ with  additional information regarding which activities are the most effective in  reducing health care fraud and abuse, and could potentially inform  agency decisions about how best to allocate limited resources.

section_title: Agency Comments
paragraphs: GAO provided a draft of the report to HHS and DOJ. In its written  comments reproduced in appendix V, HHS discussed its program  integrity efforts to reduce fraud, waste, and abuse. HHS also provided  examples of CMS’s efforts to reduce fraud, waste, and abuse in  Medicare. The examples provided were not included in our review  because they were not included in the funding used to calculate the  return-on-investment for the HCFAC program. While not commenting  specifically on our report, DOJ sent us examples of reductions in  Medicare billings for specific services (such as durable medical  equipment, home health services, and community mental health center  services) in certain Strike Force cities. In their comments, DOJ officials  stated that based on their examples, the Strike Force efforts have had a  lasting effect on savings to Medicare payments. In addition, HHS and  DOJ provided technical comments, which we have incorporated as  appropriate.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of HHS, the  Attorney General, the Inspector General of HHS, and other interested  parties. In addition, the report will be available at no charge on GAO’s   website at http://www.gao.gov. If you or your staff have any questions  about this report, please contact Kathleen M. King at (202) 512-7114 or  kingk@gao.gov or Eileen R. Larence at (202) 512-8777 or  larencee@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Key contributors to this report are listed in appendix VI.

section_title: Appendix I: Health Care Fraud and Abuse Control (HCFAC) Program Activities Conducted by Agencies in Fiscal Year 2012
paragraphs: The activities listed in table 2 below represent only activities that are  supported with HCFAC funds (as reported in agency documents or  interviews with agency officials). The table does not include other  activities conducted by the agencies that are not related to health care  fraud and abuse control.

section_title: Appendix II: Health Care Fraud and Abuse Control (HCFAC) Program Obligations for Fiscal Years 2008 through 2012
paragraphs: Table 3 summarizes the HCFAC obligations for the Department of Health  and Human Services (HHS), including the HHS Office of Inspector  General, and Department of Justice components for fiscal years 2008  through 2012 by type of appropriations. An obligation is a definite  commitment that creates a legal liability of the government for payment of  goods and services ordered or received. The table includes obligations of  mandatory HCFAC appropriations, discretionary HCFAC appropriations,  and other appropriations used to support HCFAC activities. Mandatory  HCFAC appropriations refer to the HCFAC budgetary resources  controlled by a law, principally the Health Insurance Portability and  Accountability Act of 1996, rather than appropriations acts. Discretionary  HCFAC appropriations refer to budgetary resources provided in annual  appropriation acts, other than those that fund mandatory programs.  Congress appropriated mandatory funding for HCFAC activities beginning  in fiscal year 1997, and appropriated discretionary funding for HCFAC  activities beginning in fiscal year 2009. Other appropriations include  funding from other appropriations not specific to the HCFAC program that  the agencies used, in addition to the HCFAC funds, to carry out activities  related to health care fraud and abuse. In addition, the table shows the  percentage of HCFAC obligations for personnel services and contracted  services and supplies.

Table 4 summarizes HCFAC obligations for Strike Force teams for fiscal  years 2008 through 2012 by the geographic location of the Strike Force  teams. Strike Force teams consist of investigators and prosecutors who  use data analysis techniques to identify, investigate, and prosecute  potentially fraudulent activities in geographic areas with high rates of  fraud.

section_title: Appendix III: Indicators Used by Agencies to Assess Health Care Fraud and Abuse Control (HCFAC) Program Activities
paragraphs: Appendix III: Indicators Used by Agencies to  Assess Health Care Fraud and Abuse Control  (HCFAC) Program Activities  indicates that measure is included in Fiscal Year 2012 annual HCFAC report   indicates that measure is included in Department of Health and Human Services’ Office of  Inspector General (HHS-OIG) July 2013 report on Senior Medicare Patrol programs.

Unless otherwise noted, the information on outcomes/output for each measure is for fiscal year  2012.  For the outcomes and outputs for indicators associated with ACL’s Senior Medicare Patrol program,  we used the most currently available data, which was calendar year 2012 data obtained from the July  2013 HHS-OIG report on the Senior Medicare Patrol program. The outcomes and output for these  indicators is also included in the fiscal year 2012 HCFAC report; however, the outcomes and output is  calendar year 2011 data.

In HHS-OIG’s July 2013 report on Senior Medicare Patrol program, this indicator for Medicare and  Medicaid funds recovered attributable to the programs was expanded to account for both expected  and actual funds recovered. However, in the fiscal year 2012 report, the indicator included only actual  funds recovered.
subsections: section_title: HHS-OIG Component Collective indicators in which more than one HHS- OIG component contributes
paragraphs: Amount of expected recoveries, including audit  receivables and investigative receivables and  non-HHS investigative receivables resulting from  work in areas such as states’ shares of Medicaid  restitution  $6.9 billion consisting of   $923.8 million in audit receivables  and $6 billion in investigative  receivables (which includes   $1.7 billion in non-HHS  investigative receivables resulting  from work in areas such as the  states’ shares of Medicaid  restitution)

Ratio of expected return on investment measuring  the efficiency of HHS-OIG’s health care oversight  efforts  (Target: $12.0)

section_title: HHS-OIG Component

section_title: Office of Audit Services (OAS)
paragraphs: Questioned cost recommendations (dollar value)

Funds put to better use recommendations  Timeliness of draft reports (or final reports if  issued without a draft)  (Target: 63 percent)

Audit receivables (disallowed questioned cost  recommendations)

section_title: Office of Counsel to the Inspector General (OCIG)

section_title: HHS-OIG Component

section_title: Office of Evaluation and Inspections (OEI)
paragraphs: Number of evaluations started  (Target: 57 evaluations)

Percentage of final reports completed within a  year  (Target: 55 percent)

section_title: Office of Investigations (OI)
paragraphs: Complaints received  (Target: 6,290 complaints) indicates that the indicator is included in Fiscal Year 2012 annual HCFAC report.   indicates that the indicator is included in at least one of the two HHS-OIG’s Semiannual Report to  Congress for fiscal year 2012.   indicates that the indicator is included in HHS-OIG’s Fiscal Year 2014 Justification of Estimates for  Appropriations Committees, which includes outcomes/output of indicators for fiscal year 2012.

section_title: DOJ Component Civil Division
paragraphs: Number of new civil health care fraud  investigations opened  Number of civil health care fraud matters pending  at the end of the fiscal year  Number of investigations completed per  Department of Justice attorney working on  financial fraud and health care fraud cases (Target: 11.92 investigations per attorney)

Percentage of civil cases favorably resolved for  litigating divisions (Target: 80 percent of civil cases favorably  resolved)

section_title: Civil Rights Division

section_title: DOJ Component
paragraphs: Number of cases favorably resolved for litigating  components (Target: 80 percent of civil cases favorably  resolved)

section_title: Criminal Division
paragraphs: Average number of months of prison sentences in  health care fraud cases  Amount secured through court-ordered restitution,  forfeiture, and fines  Number of investigations completed per  Department of Justice attorney working on  financial fraud and health care fraud cases (Target: 11.92 investigations per attorney)

Percentage of criminal cases favorably resolved  for litigating divisions (Target: 90 percent of criminal cases favorably  resolved)

section_title: DOJ Component Federal Bureau of Investigation (FBI)
paragraphs: Number of new health care fraud investigations  initiated by the FBI  (Targets vary by field office)

Number of pending health care fraud investigations  (Targets vary by field office)

Number of FBI health care fraud investigators and  analysts that received training  (Targets vary by field office)

Number of dismantled criminal enterprises  engaging in white-collar crime  (Target: 360 criminal enterprises)

In fiscal year 2011:  $1.2 billion in restitutions; $1 billion  in fines; $96 million in seizures;  $320 million in civil restitution; and  over $1 billion in civil settlements.

section_title: United States Attorneys’ Offices (USAOs)
paragraphs: Number of Federal health care fraud related  convictions  Number of new civil health care fraud  investigations opened  Number of civil health care fraud investigations  pending  Number of investigations completed per  Department of Justice attorney working on  financial fraud and health care fraud cases (Target: 11.92 investigations per attorney)

section_title: DOJ Component
paragraphs: Indicators used by agencies to assess  activities (Associated target, if applicable)  Percentage of criminal cases favorably resolved  for litigating divisions (Target: 90 percent of criminal cases favorably  resolved; 80 percent of civil cases favorably  resolved)

Percent of white collar crimes cases concerning  mortgage fraud, health care fraud, and official  corruption favorably resolved (Target: 90 percent of white collar cases favorably  resolved)

92.2 percent of white collar crime  cases favorably resolved in fiscal  year 2010   indicates that measure is included in Fiscal Year 2012 annual HCFAC report   indicates that measure is in DOJ’s Performance and Accountability report  ¡ indicates that the measure is in DOJ’s Performance Plan for Fiscal Year 2012  ⁄ indicates that the measure is in FBI’s Financial Crimes Report to the Public for Fiscal Years 2010 –  2011.

Unless otherwise noted, the information on outcomes/output for each measure is for fiscal year  2012.  The outputs for these indicators are included in the summary of the HCFAC report and in the section  regarding USAO activities. We report the outputs in the Civil Division section and USAO section of  this table because the outputs include civil matters handled by the USAOs and/or Civil Division.  These measures are reported at the departmental level for DOJ, in which several DOJ components  contribute, and include health care fraud cases in addition to other cases.

section_title: Appendix IV: Key Outcomes and Outputs of Health Care Fraud and Abuse Control (HCFAC) Program Activities
subsections: section_title: HCFAC Key Program Outcomes/Outputs in Selected Years Program outcome/output Obligations of other appropriations $67,274,025
paragraphs: Some of the outcomes/outputs associated with the Strike Force teams are subsets of  outcomes/outputs reported for the HCFAC program as a whole. For example, the number of  defendants charged in Strike Force cases is a subset of the total number of defendants in health care  fraud-related cases where criminal charges were filed. As a result, the outcomes/outputs reported in  this table may be duplicative.

section_title: Appendix V: Comments from the Department of Health and Human Services

section_title: Appendix VI: GAO Contacts and Staff Acknowledgements
subsections: section_title: GAO Contacts

section_title: Staff Acknowledgements
paragraphs: In addition to the contacts named above, Martin T. Gahart,   Assistant Director; Tom Jessor, Assistant Director; Christie Enders;   Sandra George; Drew Long; Lisa Rogers; and Meghan Squires   made significant contributions to the work.


Question-summary annotations: questions: question: What program activities received approximately $583.6 million?
answer: In fiscal year 2012, the Department of Health and Human Services (HHS), HHS Office of Inspector General (HHS-OIG), and the Department of Justice (DOJ) obligated approximately $583.6 million to fund Health Care Fraud and Abuse Control (HCFAC) program activities.
child_questions: question: From what sources did these funds originate?
answer: About 78 percent of obligated funds were from mandatory HCFAC appropriations (budgetary resources provided in laws other than appropriation acts), 11 percent of obligated funds were from discretionary HCFAC appropriations (budgetary resources provided in appropriation acts), and 12 percent were obligated funds from other appropriations that HHS, HHS-OIG, and DOJ used to support HCFAC activities.

question: What is the purpose of the Medicare Fraud Strike Force?
answer: HCFAC funds were obligated to support a variety of activities, including interagency Medicare Fraud Strike Force Teams--which provide additional investigative and prosecutorial resources in geographic areas with high rates of health care fraud--located in 9 cities nationwide.

questions: question: What are indicators used to inform decision-makers about?
answer: HHS, HHS-OIG, and DOJ use several indicators to assess HCFAC activities, as well as to inform decision-makers about how to allocate resources and prioritize those activities.
child_questions: question: What sorts of indicators does the United States Attorneys' Offices use?
answer: For example, in addition to other indicators, the United States Attorneys' Offices use indicators related to criminal prosecutions, including the number of defendants charged and the number of convictions.

question: Why do some indicators used reflect collective work?
answer: Additionally, many of the indicators that HHS, HHS-OIG, and DOJ use--such as the dollar amount recovered as a result of fraud cases--reflect the collective work of multiple agencies since these agencies work many health care fraud cases jointly.
child_questions: question: What do these indicators suggest has happened in recent years?
answer: Outputs from some key indicators have changed in recent years.

question: How has the return-on-investment as a result of HCFAC activities compare from the period of 2006-2008 to 2010-2012?
answer: For example, according to the fiscal year 2012 HCFAC report, the return-on-investment--the amount of money returned to the government as a result of HCFAC activities compared with the funding appropriated to conduct those activities--has increased from $4.90 returned for every $1.00 invested for fiscal years 2006-2008 to $7.90 returned for every $1.00 invested for fiscal years 2010-2012.

questions: question: What did GAO do to describe how HHS and DOJ obligated funds?
answer: To describe how HHS and DOJ obligated funds, GAO obtained financial information from HHS and DOJ for fiscal year 2012.

question: What did GAO review to examine how HHS and DOJ assess HCFAC activities?
answer: To examine how HHS and DOJ assess HCFAC activities and whether key outputs have changed over time, GAO reviewed agency reports and documents, and interviewed agency officials.
child_questions: question: How did GAO determine effectiveness of the HCFAC activities?
answer: To examine what is known about the effectiveness of the HCFAC program, GAO conducted a literature review and interviewed experts.