Health Care Fraud: Types of Providers Involved in Medicare, Medicaid, and the Children's Health Insurance Program Cases
Released: 2012-10-09T00:00:00

Letter

Background

Medicare, Medicaid, and CHIP beneficiaries receive health care from a variety of providers and in different settings. When suspected cases of fraud emerge, many agencies are involved in investigating and prosecuting these cases and they rely on multiple statutes.

Medicare, Medicaid, and CHIP Health Care Providers

Medicare, Medicaid, and CHIP beneficiaries receive health care from a variety of providers—including physicians, nurses, dentists, and other medical professionals—in many different settings, such as hospitals, medical practices, clinics, and health centers. Additionally, beneficiaries may receive care and assistance from home health agencies and aides, durable medical equipment suppliers, and medical transportation companies. In 2010, about $478 billion in federal Medicare, Medicaid, and CHIP spending was attributable to hospital care (41.3 percent of total spending) and physician and clinical services (18.3 percent of total spending) based on National Health Expenditure Account data from CMS. Expenditures for prescription drugs accounted for 9.3 percent of spending in these programs, and nursing home care accounted for 7.8 percent. Many other categories of providers accounted for the remaining 23.4 percent.

Agencies That Investigate and Prosecute Health Care Fraud

Several agencies are involved in investigating and prosecuting health care fraud cases, including the HHS-OIG; DOJ’s Civil and Criminal divisions; the 94 USAOs; the FBI; and state MFCUs. The HHS-OIG and FBI primarily conduct investigations of health care fraud, and DOJ’s divisions typically prosecute or litigate those cases.additional information about the role of each agency in fraud investigations and prosecutions.

These agencies often work together to investigate and prosecute health care fraud cases. For example, HHS-OIG may open a fraud case, work with the FBI during the investigation, and then refer the case to a USAO for prosecution. Additionally, HHS-OIG, the FBI, a USAO, and DOJ’s Criminal Division work jointly on health care fraud cases handled by Medicare Strike Force teams. Health care fraud cases are opened by the agencies either when they receive information about suspected fraudulent activity from a source—which can include program beneficiaries and CMS and its contractors—or if they proactively identify possible fraudulent behavior through data analysis. Additionally, in civil cases known as qui tam cases, individuals—referred to as relators—with evidence of fraud can file a civil suit under the False Claims Act (FCA). These qui tam cases are handled by a USAO or DOJ’s Civil Division, though they may receive assistance in the investigation from HHS-OIG or the FBI. In other fraud cases, if a fraud case is opened by HHS-OIG, the agency typically conducts its investigation, determines whether the case has merit, and refers the case to DOJ for criminal prosecution or civil litigation. Alternatively, HHS-OIG may find that the case does not have merit and may close the case. HHS-OIG also has authority to impose civil monetary penalties or exclude the provider from participating in federal health care Similarly, DOJ’s divisions may choose not to pursue a fraud programs.case for a number of reasons, including a lack of evidence or insufficient evidence to support the charges, or a lack of resources for investigation or prosecution.

MFCUs investigate and typically prosecute health care fraud cases in the state’s Medicaid program under state laws, and frequently coordinate with HHS-OIG and DOJ on the investigation and prosecution of certain fraud cases. Many MFCUs have authority to prosecute cases of fraud, but not all MFCUs are able to do so and refer cases to other agencies for prosecution. For example, Texas’ MFCU does not have the authority to prosecute cases and refers cases to another agency or office, such as the U.S. Attorney’s Office or the state’s District Attorney, for prosecution.

Fraud Statutes and Outcomes

Several statutes concern health care fraud.following:

Civil monetary penalty provisions of the Social Security Act are applicable to certain enumerated activities, such as knowingly presenting a claim for medical services that is known to be false and fraudulent. The Social Security Act also provides for criminal penalties for knowing and willful false statements in applications for payment. In addition, providers may be excluded on a mandatory or permissive basis from participating in federal health care programs for engaging in certain fraudulent activities.

The Anti-Kickback statute makes it a criminal offense for anyone to knowingly and willfully solicit, receive, offer, or pay any remuneration in return for or to induce referrals of items or services reimbursable under a federal health care program, subject to statutory exceptions and regulatory safe harbors.

For example, a payment program under which a hospital paid physicians who referred patients for admission would implicate the anti-kickback statute.

The Stark law and its implementing regulations prohibit physicians from making “self-referrals”—certain referrals for “designated health services” paid for by Medicare to entities with which the physician (or immediate family) has a financial relationship. The Stark law also prohibits these entities that perform the “designated health services” from presenting claims to Medicare or billing for these services.

The Federal Food, Drug, and Cosmetic Act makes it unlawful to, among other things, introduce an adulterated or misbranded pharmaceutical product or device into interstate commerce.

The False Claims Act (FCA) is often used by the federal government in health care fraud cases.including the knowing presentation of a false claim for payment by the federal government. Claims that are submitted in violation of certain other statutes may also be considered false claims and, as a result, create additional liability under the FCA. Many health care fraud cases pursued under the FCA are for billing for goods or services not rendered, billing for unnecessary health care goods or services, or billing for goods or services at a higher rate than what was provided. Under the FCA, civil cases can be brought by the U.S. government or by a private citizen.

The FCA prohibits certain actions, The outcome of a fraud case can depend on whether the case is civil or criminal, and if the case is prosecuted or litigated, the penalties authorized under the relevant statutes. For example, civil cases that are litigated may result in judgments imposed by a court or settlements reached by the subjects and litigators of the fraud case. In criminal cases, outcomes can include incarceration, probation, and fines. HHS-OIG may also impose civil monetary penalties on providers for committing fraud, and may exclude providers from participating in federal health care programs. In some cases, a subject may receive both civil and criminal penalties, and be excluded.

Medical Facilities Were the Most Frequent Subjects of Criminal Investigations, and Hospitals Were the Most Frequent Subjects of Civil Investigations

According to 2010 data, 10,187 subjects were investigated for health care fraud. Medical facilities (such as medical centers, clinics, and medical practices) and durable medical equipment suppliers were the most frequent subjects of criminal fraud cases in 2010. Hospitals and medical facilities were the most frequent subjects of civil fraud cases, including cases that resulted in judgments or settlements. Nearly 2,200 individuals were excluded from program participation by HHS-OIG, about 60 percent of whom were in the nursing profession.

Approximately 10,200 Subjects Were Investigated for Health Care Fraud in 2010

According to 2010 data, 10,187 subjects were investigated for health care fraud—of which, 7,848 were subjects of criminal fraud cases, and 2,339 were subjects of civil fraud cases. Data from 2010 shows that HHS-OIG investigated health care fraud cases for nearly 8,900 subjects, many more than were opened by the USAOs and DOJ’s Civil Division. Table 2 contains information on health care fraud subjects by agency, reflecting the work of each agency in 2010. To fully reflect the work of each agency, data on subjects that were included in more than one agency database were included in the top portion of the table. The duplicate cases were removed to arrive at the unique count of subjects and were not included in our other analyses. Data comparing cases handled in 2005 and 2010 show that HHS-OIG investigated cases for nearly 2,800 more subjects in 2010 than it did in 2005, while the USAOs and DOJ’s Civil Division handled cases for approximately the same number of subjects.

According to 2010 HHS-OIG data, most of the subjects involved in fraud cases were referred to HHS-OIG by federal law enforcement agencies— such as the FBI—(38 percent), or state or local law enforcement agencies (10 percent). Case subjects were also referred to HHS-OIG by CMS contractors tasked with program integrity (14 percent), current or former employees of providers (9 percent), or individuals (9 percent), and the remainder were from other sources. (See table 3 for additional information on the source of health care fraud cases referred to HHS- OIG.)

About 49 percent of criminal health care fraud subjects were, or were affiliated with, medical facilities (such as medical practices, clinics, or centers), durable medical equipment suppliers, and home health agencies. Of the 7,848 subjects associated with criminal cases, about 1,100 were charged, and 85 percent of those charged were found guilty or pled guilty or no contest. Of those subjects who were found guilty or pled guilty or no contest, about 37 percent were medical facilities and durable medical equipment suppliers.

According to 2010 data, many different types of providers—including medical facilities and hospitals, or individuals affiliated with these entities—were suspected of health care fraud. Specifically, about one- quarter of subjects investigated in criminal health care fraud cases were medical facilities or were affiliated with these facilities. Additionally, about 16 percent of subjects were durable medical equipment suppliers. Over 19 percent were subjects for which we could not determine an affiliation. See table 4 for additional information on the subjects of criminal health care fraud cases by provider type for 2010.

Among the 7,848 subjects in 2010 criminal cases, nearly 50 percent were the entities themselves, rather than individuals affiliated with those entities. See table 5 for more detailed information on the types of providers that were subjects in 2010 criminal cases. Of the 3,864 subjects that were entities, most were durable medical equipment suppliers (819), home health agencies (507), medical centers or clinics (506), or medical practices (486). Additionally, more than 15 percent were physicians, and about 14 percent were management employees—such as owners, operators, or managers.

Our data show that 2010 criminal cases involved 2,300 more subjects than 2005 cases. Additionally, some provider types had particularly large increases in 2010 compared to the number of subjects investigated in criminal cases in 2005. For example, cases where pharmacies were the subjects increased from 99 subjects in 2005 to 321 in 2010 (an increase of 224 percent), and the number of home health agency subjects increased from 284 to 639 (an increase of 125 percent). The 2005 data show that medical facilities and durable medical equipment suppliers were the provider types with the most subjects investigated in cases, as was also the case with 2010 data. In 2005, medical facilities represented 23 percent of all subjects in criminal cases, and durable medical equipment suppliers accounted for 18 percent. Similarly, in 2010, medical facilities accounted for 24 percent of all subjects in criminal cases, and durable medical equipment suppliers accounted for 16 percent.

Most of the 7,848 subjects who were investigated for criminal fraud in 2010 were not pursued—meaning that HHS-OIG did not refer the subject’s case to DOJ for prosecution. Most subjects—about 85 percent—were investigated in criminal cases that were not pursued for a variety of reasons, mainly due to lack of resources or insufficient evidence. The 2010 data indicated that 1,086 subjects were charged in criminal fraud cases, which represented about 14 percent of all criminal case subjects. Additionally, nearly 1 percent of subjects were involved in criminal case appeals, most of which were decided favorably for the U.S. government. See table 6 for additional information about the number of subjects in criminal cases by outcome.

Among the 1,086 subjects that were charged, over 85 percent (925 subjects) were found guilty, pled guilty, or pled no contest to some or all of the criminal charges against them. For the remaining 15 percent of subjects, charges were dismissed (9.4 percent), subjects were found not guilty (1.2 percent), or had another outcome (4.2 percent).

Of the 925 subjects who were found guilty or pled guilty or no contest, about 19 percent were from medical facilities—including medical centers, clinics, or practices. Although 2010 Medicare, Medicaid, and CHIP expenditures on durable medical equipment services was 1.3 percent of total spending in those programs, approximately 19 percent of subjects that were found guilty or pled guilty or no contest were durable medical equipment suppliers. Many different provider types were among the remaining subjects found guilty or that pled guilty or no contest. We could not identify the affiliation of nearly one-third of the subjects, including both health care providers and individuals. See table 7 for additional information on these subjects in 2010 criminal cases by provider type.

Of the 925 subjects who were found guilty or pled guilty or no contest, 60 percent were sentenced to incarceration, and 73 percent were sentenced to probation. Nearly 26 percent of those sentenced to incarceration were subjects affiliated with durable medical equipment suppliers, and 21 percent were affiliated with medical facilities. Similarly, both durable medical equipment suppliers and medical facilities each represented 17 percent of subjects sentenced to probation. The average length of a sentence to incarceration was about 3.5 years, and the maximum sentence received was a life sentence. Nearly 60 percent of subjects sentenced to incarceration received sentences between 2 and 5 years, while nearly 21 percent received a term of 1 year or less. More than 13 percent received sentences between 6 and 10 years and about 5 percent received sentences of more than 10 years of incarceration. The average probation term was 2.8 years, and the maximum term was 10 years. Nearly 78 percent of subjects sentenced to probation received a probation term between 2 and 5 years.

Subjects of criminal fraud cases could also be sentenced to home detention, public service, or their sentences could be suspended. Additionally, subjects could also be ordered to pay fines and restitution. Data from HHS-OIG contained information on these types of penalties, but data we received from the USAOs did not. According to 2010 data from HHS-OIG

56 subjects were sentenced to home detention terms;

75 subjects were sentenced to complete public service;

31 subjects received suspended sentences;

440 subjects were required to pay a fine; and

307 subjects were required to pay restitution.

Among those subjects that were required to pay fines or restitution, or both, the average amounts required were $898,361 in fines, and $1.8 million in restitution. In total, subjects were ordered to pay nearly $960 million in combined fines and restitution.

Hospitals and Medical Facilities Were the Most Frequent Subjects of Civil Fraud Cases, Including Cases That Resulted in Judgments or Settlements

According to 2010 civil case data for health care fraud, 2,339 subjects were investigated in civil cases. Hospitals represented nearly 20 percent of these subjects, and medical facilities about 18 percent. Civil cases involving approximately 1,100 subjects were pursued—meaning that the USAOs or DOJ’s Civil Division received the cases and took some sort of action, such as litigating the case; and of those, 55 percent resulted in a judgment for the government or in a settlement. For those cases that resulted in a judgment or settlement, or both, about 44 percent of the subjects were hospitals and medical facilities.

According to 2010 data, hospitals were nearly 20 percent of the subjects of civil fraud cases, and medical facilities were also frequently the subjects of civil cases, making up about 18 percent of the subjects. We were unable to determine the provider type or their affiliation for about 18 percent of the subjects of civil cases. (See table 8 for additional information on the subjects of civil health care fraud cases by provider type for 2010.)

As previously mentioned, individuals can bring civil health care fraud suits, known as qui tam cases, under the FCA. According to 2010 data from the USAOs and DOJ’s Civil Division, 88 percent of subjects investigated in civil cases were investigated in qui tam cases.

Nearly 61 percent of the subjects investigated in 2010 civil cases were entities themselves, rather than individuals affiliated with those entities. Most of these entities were hospitals, medical centers or clinics, medical practices, or pharmaceutical manufacturers or suppliers. Additionally, physicians represented 12 percent of the subjects; and management employees, such as owners, operators, or managers, represented 8 percent of the civil case subjects. (See table 9 for more-detailed information on the types of providers that were subjects in 2010 civil cases.)

In 2010, over 600 more subjects were investigated in civil cases than in 2005, about a 35 percent total increase. Changes in provider types for civil cases are not reported here because we were unable to identify provider types for about 31 percent of the subjects in the 2005 data. In the 2010 data, we were unable to identify the provider type for about 18 percent of subjects. Because of this limitation, the percentage increases in certain provider types investigated in civil fraud cases may not be an accurate reflection of the actual increases in provider types of civil fraud cases.

Not all of the subjects investigated in 2010 civil cases were pursued— meaning that the USAOs or DOJ’s Civil Division received the case and took some sort of action. According to the data we received, 1,087 subjects were involved in civil cases that were pursued, representing nearly 47 percent of all civil case subjects. Among other subjects of civil cases, more than 53 percent were not pursued for numerous reasons, including a lack of resources or insufficient evidence. Additionally, less than 1 percent of subjects were involved in civil appeals cases. (See table 10 for additional information about the number of subjects involved in civil cases by outcome.)

According to data from the USAOs and DOJ’s Civil Division, most qui tam cases did not result in a judgment or settlement. For example, 52 percent of subjects in qui tam cases were either voluntarily dismissed by the relator (34 percent) or were declined by the USAOs or DOJ’s Civil Division (18 percent). Nearly 24 percent of qui tam cases were settled and in 8 percent of qui tam cases there was a judgment for the government.

For the 602 subjects for which cases resulted in a settlement or judgment for the government or for the relator, 27 percent of the subjects were hospitals and about 17 percent were medical facilities. For nearly 16 percent of subjects, we were unable to determine the affiliation of the provider or individual. (See table 11 for information on provider types for subjects where the case resulted in a settlement or judgment for the government or relator.)

According to data from HHS-OIG, of those subjects investigated in cases with a judgment or settlement, 275 subjects were to pay restitution as a result of the judgment or settlement and 89 subjects were to pay fines. Approximately 38 percent of the subjects that were to pay restitution were hospitals; 17 percent were medical facilities; and 11 percent were physicians whose affiliation we were unable to determine. Among those subjects that were to pay fines or restitution, or both, the average amounts were about $7.1 million in fines and about $5.4 million in restitution. In total, subjects were to pay over $2.1 billion in combined fines and restitution as a result of the judgments or settlements.

Nearly 2,200 Individuals and Entities Were Excluded from Program Participation by HHS-OIG, about 60 Percent of Whom Were in the Nursing Profession

HHS-OIG excluded individuals and entities from participating in federal health care programs for a variety of reasons in 2010. These reasons included convictions for health care fraud as well as reasons other than for health care fraud, such as patient abuse or neglect. When individuals or entities are excluded, their provider enrollment is revoked According to 2010 and they are not eligible to bill for services provided.exclusion data we received from HHS-OIG, 2,190 individuals and entities were excluded. About 60 percent of the individuals and entities excluded were those in the nursing profession, such as nurses and nurses’ aides. The next-largest provider type excluded was pharmacies or individuals affiliated with pharmacies, though they only represented about 7 percent of the 2010 exclusions. (See table 12 for additional information on the types of providers excluded.)

There were a number of reasons why the 2,190 individuals and entities were excluded; about 42 percent were excluded for license revocation, suspension, or surrender; over 28 percent were for program-related convictions; and about 10 percent were for felony health care fraud convictions. Most of those excluded because of revoked, suspended, or surrendered licenses were in the nursing profession. (See table 13 for additional information on the reasons for excluding individuals in 2010.)

Home Health Providers Were the Largest Percentage of Criminal Convictions for MFCUs, and Pharmaceutical Manufacturers Were Ordered to Pay the Most in Civil Cases

Data we received from 10 state MFCUs show that more than 40 percent of the fraud subjects were home health care providers, and health care practitioners. Home health care providers also accounted for nearly 40 percent of criminal convictions and about 45 percent of subjects sentenced in 2010. In 2010, pharmaceutical manufacturers were to pay more than 60 percent of the total amount of civil judgments and settlements.

More Than 40 Percent of Subjects in Fraud Cases Were Home Health Care Providers and Health Care Practitioners

Of the 2,742 subjects of health care fraud in Medicaid and CHIP referred to MFCUs for investigation, more than 40 percent were affiliated with two provider categories: home health care providers (26.6 percent) and health care practitioners (14.8 percent). Home health care providers and pharmaceutical manufacturers are the two provider categories that experienced the highest increases when comparing 2005 and 2010 data. For example, the number of home health care providers suspected of fraud increased significantly from 2005 to 2010, from 357 subjects to 730, a 104 percent increase. This was primarily driven by an increase in fraud cases among health care aides, which increased from 79 subjects in 2005 to 324 in 2010. Similarly, the number of pharmaceutical manufacturers in fraud cases increased significantly from 71 in 2005 to 296 in 2010. (See table 14, below, for additional information on provider types referred to MFCUs in fraud investigations.)

Over half of the MFCUs’ subjects of fraud cases in 2010 were referred by the states’ Medicaid agencies (30.9 percent) and private citizens (25.1 percent). MFCUs do not pursue all cases of health care fraud that are referred to them.

Home Health Providers Accounted for Nearly 40 percent of Criminal Convictions and About 45 Percent of Subjects Sentenced for 2010

In 2010, 692 subjects were indicted or charged in criminal health care fraud cases handled by 10 MFCUs; of those, nearly 40 percent were home health care providers—which includes home health care agencies, and home health care aides. Home health care providers also accounted for nearly 40 percent of criminal fraud convictions in 2010; health care practitioners—physicians, doctors of osteopathy, nurses, physician assistants, and nurse practitioners—had the second-highest percentage of criminal convictions in 2010 with approximately 16 percent. The number of home health care providers convicted in criminal cases more than doubled from 79 convictions in 2005 to 192 convictions in 2010, and health care practitioners had an increase of 11 convictions compared to 2005. (See table 15 for additional information about criminal case outcomes and prosecutions of subjects by provider type for cases handled by 10 MFCUs.)

According to 2010 data for cases handled by the 10 MFCUs, home health care providers had the largest number of subjects sentenced to incarceration, probation, or other criminal case outcomes, accounting for nearly 45 percent of the total number of subjects. Durable medical equipment suppliers accounted for the largest monetary penalties, yet had relatively few subjects sentenced to incarceration, probation, or other criminal case outcomes, such as deferred sentences. Of all of the subjects sentenced, 42 percent were sentenced to probation, 32 percent were sentenced to incarceration, and 26 percent received other criminal case outcomes.outcomes.)

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Appendix I: Methodology for Analyzing Data Obtained from the Federal Agencies

To identify subjects of health care fraud cases in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)—including referrals, investigations, prosecutions, and outcomes—by provider type, and to examine changes in the distribution of provider types in 2005 and 2010, we obtained data on health care fraud cases from the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), the Department of Justice’s (DOJ) Executive Office of U.S. Attorneys (EOUSA)—which provides administrative support for the 94 U.S. Attorney’s Offices (USAO)—and DOJ’s Civil Division. We obtained data on fraud cases involving Medicare, Medicaid, and CHIP that were closed in calendar year 2005 or 2010. We collected data for closed cases only— meaning that the agencies were no longer actively investigating or prosecuting a case—to avoid concerns about analyzing or reporting information about open cases.

We obtained data from HHS-OIG’s Investigative Reporting and Information System, which contains information on health care fraud cases received or investigated by HHS-OIG. The data we received contained information on civil and criminal health care fraud cases closed in calendar years 2005 or 2010, as well as exclusions from program participation. The HHS-OIG data included information about the subjects, sources of the cases, outcomes of the investigations and prosecutions (if the cases were pursued), and the reasons for which the cases were closed (such as lack of evidence). The data we received from HHS-OIG also contained information on the provider types of the subjects.

Additionally, we obtained data from two divisions within DOJ—EOUSA and the Civil Division. The data we received from EOUSA was from the Legal Information Office Network System and contained information about the subjects of the fraud cases, outcomes of the prosecutions, and the reasons for which the cases were closed. Provider type is not a required field in the USAOs database; consequently the USAOs do not consistently have provider type information. DOJ’s Civil Division provided us data from the CASES database. The data received contained information about the subjects, outcomes of the fraud cases, and reasons the cases were closed. The DOJ Civil Division does not collect information on the subject’s provider type. The data we received from HHS-OIG pertained only to health care fraud in Medicare, Medicaid, and CHIP; however, data we received from the USAOs and DOJ’s Civil Division may have also included other federal health care program fraud as well as fraud in the private sector as the databases used to track fraud cases do not capture fraud exclusively in Medicare, Medicaid, and CHIP.

Many fraud cases are handled jointly with HHS-OIG, USAOs, and DOJ’s Civil Division, and are entered separately into each agency’s database that tracks fraud cases. As a result, the data we received contains duplicate information on health care fraud cases and subjects. In order to minimize the duplication across the data we received, we identified fraud case subjects that were in more than one data set we received by comparing subject information to the extent possible. We then excluded the duplicate data that we identified so that each subject was only included once. However, it is possible that our analysis still includes some duplication in fraud cases and subjects. For cases and subjects that we identified as a match, we used the information in the HHS-OIG data instead of either the USAO data or DOJ’s Civil Division data because the HHS-OIG data contained information on the subject’s provider type. Among the data involving criminal cases, we identified 590 subjects—291 subjects in the 2005 data and 299 subjects in the 2010 data—that were matches between the HHS-OIG data and the USAO data. For civil case data, we identified 423 subjects—166 subjects in the 2005 data and 257 subjects in the 2010 data—that were matches between data we received from HHS-OIG, the USAOs, or DOJ’s Civil Division. We removed the duplicate subjects we identified from parts of our analysis.

In the USAO and Civil Division data, there were 2,470 subjects—1,484 of which were investigated in civil cases, and 986 that were investigated in criminal cases—for which we did not identify a duplicate case in the HHS- OIG data, and did not contain information on the provider type. To identify the type of provider for these subjects, we obtained information from court records using the Public Access to Court Electronic Records (PACER).

We reviewed court documents, such as indictments and plea agreements, to obtain information on the subject’s provider type. We reviewed information we found using PACER and categorized it into one of the provider categories in our analysis. However, our analysis of the changes in the types of providers in 2005 and 2010 is limited since the percentage of subjects for which we were unable to determine the provider type was substantially higher in 2005 for civil case subjects. One of the reasons we could not determine the provider type was because many of the court records for 2005 were not available in PACER.

After we identified the provider types for data we received from USAOs and DOJ’s Civil Division, and after reviewing the data on provider types in the HHS-OIG data, we created categories of providers in order to analyze the data. We assigned the subjects categories: the entity in which health care was provided, and the subject’s role in providing care (if care was provided). For example, an owner of a durable medical equipment supply company was categorized into an entity (durable medical equipment supplier) and a role (management employee); a physician employed by a hospital would be categorized as hospital for the entity and physician for the role. Table 18 provides additional details about the categories we developed for our analysis.

To assess the reliability of the data we received from HHS-OIG, USAOs, and DOJ’s Civil Division, we interviewed officials from each of those agencies about the quality of the data, reviewed relevant documentation, and examined the data for reasonableness and internal consistency. We found these data were sufficiently reliable for the purposes of our report.

Appendix II: Methodology for Selecting State Medicaid Fraud Control Units and Analyzing Submitted Data

To identify subjects of Medicaid and Children’s Health Insurance Program (CHIP) fraud cases investigated or prosecuted, or both, by Medicaid Fraud Control Units (MFCU) by provider type, and to examine changes in the distribution of provider types investigated and prosecuted for fraud in 2005 and 2010, we collected data from 10 state MFCUs. Using data about MFCUs collected by the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), we selected the 10 state MFCUs that collectively accounted for the majority of open fraud investigations, fraud indictments or charges, fraud convictions, MFCU grant expenditures, and number of MFCU staff for all MFCUs in fiscal year 2010. The state MFCUs we selected also represented over 40 percent of the civil settlements and judgments—though we were not able to analyze fraud-specific civil settlements and judgments because the HHS-OIG data available do not separate out fraud settlements and judgments from abuse and neglect case settlements and judgments. The 10 selected MFCUs were in California, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Ohio, Texas, and Virginia. The 10 selected MFCUs accounted for 66 percent of MFCU grant expenditures. (See table 19 for additional information about the MFCUs.)

We collected data from the state MFCUs by developing a standardized data-collection instrument based on the HHS-OIG’s Quarterly Statistical MFCU Report Template and accompanying definitions. (See table 20 for additional information about the definitions for the categories of provider types.)

Before finalizing the data-collection instrument, we asked officials from two MFCUs to review the instrument to determine if the instrument would elicit appropriate responses, and to identify any data that would be particularly challenging for a MFCU to provide. We also interviewed officials from the Centers for Medicare & Medicaid Services, the HHS- OIG’s Office of Evaluation and Inspections, and the National Association of MFCUs to obtain information on fraud cases handled by the MFCUs.

We collected data for closed health care fraud cases only—meaning that agencies were no longer actively investigating or prosecuting a case—to avoid concerns about analyzing or reporting information about open cases. We requested data from the state MFCUs for any actions—such as indictments, convictions, or penalties—that occurred on a subject’s fraud case in 2005 or 2010. For example, if a subject was indicted in 2004 and sentenced in 2005, the MFCU data would only include information about the subject’s sentencing in 2005, because the indictment occurred in a year outside of our data request. We requested aggregate subject- level data, rather than case-level data, from the MFCUs using a standardized data-collection instrument. The MFCUs reported information on the total number of fraud subjects they investigated and prosecuted, and did not provide detailed information for each instance of fraud. Because the state MFCUs may work together on certain cases that cross state lines, it is possible that duplicate data are included in our analysis. We relied on the data as reported by the 10 MFCUs and did not independently verify these data. However, we reviewed the data for reasonableness and followed up with state officials for clarification when necessary. We found that these data were sufficiently reliable for the purposes of our report.

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, key contributors to this report were Martin T. Gahart, Assistant Director; Christie Enders; Jawaria Gilani; Dan Lee; Drew Long; Dawn Nelson; and Monica Perez-Nelson.