To determine the primary reasons for the growth in reported CMP debt at CMS and whether CMS’ CMP receivables have similar financial accountability and reporting issues as its non-CMP receivables, we obtained and reviewed CMS’ audited financial statements, HHS’ accountability reports, and other financial reports that relate to CMS’ CMP and non-CMP collection activities. We also analyzed CMS’ reported CMP receivables and related accounts and information for fiscal years 1997 through 2000 and compared CMS’ CMP accounting records to detailed subsidiary tracking records. We did not independently verify the completeness or accuracy of the subsidiary system data or test information security controls over the systems used to compile these data. We interviewed officials in CMS, HHS OIG, and Department of Justice’s (DOJ) Executive Office for U.S. Attorneys (EOUSA) to obtain explanations for identified significant trends, similarities with non-CMP receivables, material internal control weaknesses, findings and exceptions, as well as unsupported/unreconciled amounts. To determine whether adequate processes exist to collect CMP debt, we obtained an understanding of CMS’ CMP debt collection policies and procedures that relate to CMS’ long-term care, HHS OIG, and DOJ cases, as well as applicable federal laws and regulations. Because CMS could not provide complete and reliable CMP information, a random sample was not selected from CMP receivables as of September 30, 2000, and CMP receivables cases closed in fiscal years 1999 and 2000. However, as agreed with your staff, we performed limited tests of CMS’ debt collection policies and procedures. Specifically, we selected and reviewed all delinquent CMP debts (over 60 days delinquent per CMS records) with a recorded receivables balance as of September 30, 2000, greater than $2 million (12 debts). This represented 57 percent of the delinquent CMP debt balance and 27 percent of the total CMP debt balance per CMS records. We interviewed DOJ’s EOUSA officials to obtain explanations for identified findings and exceptions. We also analyzed long-term care CMP assessment and settlement data for fiscal years 1999 and 2000 for all cases in which the settlements were reached at three selected CMS regional offices. According to CMS’ Civil Monetary Penalty Tracking System, the long-term care cases opened at these regional offices represented approximately 76 percent of all long- term care CMP cases opened during this 2-year period. For identified findings and exceptions, we developed and submitted questions to CMS’ regional offices. We obtained and analyzed the regional offices’ written responses to our questions. To determine what roles, if any, OMB and Treasury play in overseeing and monitoring the government’s collection of civil debt, we interviewed OMB and Treasury officials. We performed our review in Washington, DC and Atlanta, GA from March 2001 through August 2001 in accordance with U.S. generally accepted government auditing standards. Prior to our December 14, 2001, briefing to your office on the results of our work, we provided CMS, HHS OIG, DOJ’s EOUSA, Treasury, and OMB with a draft of our detailed briefing slides, which contained recommendations to the Administrator of CMS, for review and comment. The comments received are discussed in the “Agency Comments and Our Evaluation” section of this report and on the “Agency Comments” slide in Appendix I or incorporated into the report as applicable. CMS’ letter is reprinted in appendix II. As of September 30, 2000, HHS reported that CMS’ CMP receivables totaled about $260 million. CMP debt results from deficiencies at long-term care nursing facilities or fraud and abuse and is collected by three separate groups. CMS’ regional offices are responsible for the long-term care debt, and HHS OIG and DOJ are responsible for fraud and abuse debt. DOJ fraud debt accounted for about 88 percent of the reported $260 million receivables balance as of September 30, 2000, while OIG fraud and abuse debt accounted for approximately 11 percent and CMS’ long-term care debt accounted for about 1 percent of the reported balance. For the long-term care debt, Sections 1819 (42 U.S.C. Sections 1395i-3) and 1919 (42 U.S.C. Section 1396r) of the Social Security Act establish requirements for surveying nursing facilities to determine whether they meet the requirements for participation in the Medicare and Medicaid programs. A survey must be conducted at each nursing facility within 15 months of the previous survey by a state survey agency. In addition, the statewide average interval between surveys must be 12 months or less. Remedies, of which CMP is one, may be used when a nursing facility is not in substantial compliance with the requirements for participation in the Medicare and Medicaid programs. A CMP is imposed either for the number of days ($50 to $10,000 per day) or for each instance ($1,000 to $10,000 per instance) that a nursing facility is not in substantial compliance with the participation requirements. The amount depends on the severity of the deficiency. A written notice of the CMP is sent to the nursing facility. The facility has 60 days from the date of the notice to either waive its right to an administrative hearing and receive automatically a reduction of 35-percent in the CMP amount or request an administrative hearing. At any time prior to an administrative hearing, the nursing facility may enter into a settlement of the CMP amount. Once there is an administrative hearing decision or a settlement, the final CMP receivable amount is determined. According to CMS’ State Operations Manual, if a decision is made to settle, the settlement should not be for a better term than had the nursing facility opted for a 35-percent reduction. To track assessments and collections, CMS’ regional offices use the Civil Monetary Penalty Tracking System for fiscal year 1999 and later CMP cases and spreadsheets for fiscal year 1996 through fiscal year 1998 CMP cases. In addition, CMS’ regional offices use the long-term care system to track CMP cases. For civil health care fraud matters, DOJ generally uses the False Claims Act, as well as common law fraud remedies, payment by mistake, unjust enrichment, and conversion to recover amounts from those who have submitted false or improper claims to the United States. Civil health care fraud matters are referred directly from federal or state investigative agencies, or result from filings by private persons known as “relators,” who file suits on behalf of the federal government under the 1986 qui tam amendments to the False Claims Act. The False Claims Act (31 U.S.C. Sections 3729-3733) provides that anyone who “knowingly” submits a false claim to the government is liable for a penalty from $5,000 to $10,000 plus up to three times the amount of damages sustained by the government. A court judgment or settlement establishes amounts due by violators. DOJ prepares a Health Care Fraud Tracking Form, which is submitted to HHS OIG and CMS’ Office of Financial Management, and establishes the debt in a tracking system. If the health care violator does not pay the fraud debt, DOJ’s U.S. Attorney Offices (USAO) have several options to pursue collection, including contacting the debtor, securing or executing upon a judgment, filing liens or garnishments, and referring the delinquent debt to Treasury. To track assessments and collections of civil health care fraud cases, DOJ’s USAOs use either the Tracking Assistance for the Legal Office Network or the Collection Litigation Automated Support System, and DOJ’s Civil Division uses the Debt Collection System. HHS OIG also pursues fraud and abuse cases. According to HHS OIG data, since 1988, about 90 percent of its CMP assessments relate to the requirements of Section 1867 of the Social Security Act (42 U.S.C. Section 1395dd). This statute specifies that a hospital’s emergency department must provide an appropriate medical screening examination within the capability of the hospital’s emergency department to any individual who comes to the department with a request for examination or treatment of a medical condition. In addition, if the hospital determines that the individual has an emergency medical condition, the hospital must either stabilize the medical condition or transfer the individual to another medical facility. This statute provides for a maximum penalty of $50,000 per violation. According to HHS OIG data, since 1988, approximately 10 percent of its CMP assessments relate to violations of the statutory provisions applicable to false or fraudulent claims submitted to federal health care programs in Section 1128A of the Social Security Act (42 U.S.C. Sections 1320a-7a). This law provides that for false, fraudulent, or otherwise improper claims, HHS may impose a penalty of not more than $10,000 for each item or service and an assessment of no more than triple the amount claimed for each item or service in lieu of damages. HHS OIG uses spreadsheets to track assessments and collections of CMP cases. CMS’ Office of Financial Management is responsible for the accounting and reporting of CMP receivables in the general ledger using the Financial Accounting Control System. This office is also responsible for determining the allowance for uncollectible receivables. According to CMS, an allowance is calculated as the amount of CMP debt delinquent for 60 days or longer that is considered to be inactive and truly delinquent based on a case-by-case review of each receivable. HHS OIG’s Office of Audit Services stated that due to the immateriality of the CMP receivables balances in relation to CMS’ total accounts receivable balance, CMS’ external financial statement auditors have not performed any detailed audit work on CMP receivables.