oversight

Health Care Fraud: Types of Providers Involved in Medicare, Medicaid, and the Children's Health Insurance Program Cases

Published by the Government Accountability Office on 2012-09-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States Government Accountability Office

GAO                          Report to Congressional Requesters




September 2012
                             HEALTH CARE
                             FRAUD
                             Types of Providers
                             Involved in Medicare,
                             Medicaid, and the
                             Children’s Health
                             Insurance Program
                             Cases


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GAO-12-820
                                                September 2012

                                                HEALTH CARE FRAUD
                                                Types of Providers Involved in Medicare, Medicaid,
                                                and the Children’s Health Insurance Program Cases
Highlights of GAO-12-820, a report to
congressional requesters




Why GAO Did This Study                          What GAO Found
GAO has designated Medicare and                 According to 2010 data from the Department of Health and Human Services’
Medicaid—which are administered by              Office of the Inspector General (HHS-OIG) and the Department of Justice (DOJ),
the Centers for Medicare & Medicaid             10,187 subjects—individuals and entities involved in fraud cases—were
Services (CMS), an agency of HHS—               investigated for health care fraud, including fraud in Medicare, Medicaid, and the
as high-risk programs partly because            Children’s Health Insurance Program (CHIP). These subjects included different
their size and complexity make them             types of providers and suppliers—such as physicians, hospitals, durable medical
vulnerable to fraud. Several federal            equipment suppliers, home health agencies, and pharmacies—that serve
agencies conduct health care fraud              Medicare, Medicaid, and CHIP beneficiaries. For criminal cases in 2010, medical
investigations and related activities,
                                                facilities—including medical centers, clinics, or practices—and durable medical
including HHS-OIG and DOJ’s Civil
                                                equipment suppliers were the most-frequent subjects investigated. Hospitals and
Division, and the 93 U.S. Attorney’s
Offices (USAO). In fiscal year 2011,
                                                medical facilities were the most-frequent subjects investigated in civil fraud
the federal government devoted at               cases, including cases that resulted in judgments or settlements.
least $608 million to conduct such              •   Subjects of criminal cases: Many of the 7,848 criminal subjects in 2010
activities. Additionally, state MFCUs               were medical facilities or durable medical equipment suppliers, representing
investigate health care fraud in their              about 40 percent of subjects of criminal cases. Similarly, in 2005, medical
state’s Medicaid and CHIP programs.
                                                    facilities and durable medical equipment suppliers accounted for 41 percent
GAO was asked to provide information                of criminal case subjects. Data from 2010 show that most of the subjects
on the types of providers that are the              were in cases that were not referred by HHS-OIG to DOJ for prosecution
subjects of fraud cases. This report                (85 percent). Of the subjects whose cases were pursued, most were found
identifies provider types who were                  guilty or pled guilty or no contest.
the subjects of fraud cases in
(1) Medicare, Medicaid, and CHIP                •   Subjects of civil cases: Over one-third of the 2,339 subjects of civil cases in
that were handled by federal agencies,              2010 were hospitals and medical facilities. In 2010, about 35 percent more
and changes in the types of providers               subjects were investigated in civil fraud cases than in 2005. Nearly half of the
in 2005 and 2010; and (2) Medicaid                  subjects of 2010 cases were pursued. Among the subjects whose cases
and CHIP fraud cases that were
                                                    were pursued, 55 percent resulted in judgments or settlements.
handled by MFCUs. To identify
subjects of fraud cases handled by              Additionally, data from HHS-OIG show that nearly 2,200 individuals and entities
federal agencies, GAO combined data             were excluded from program participation for health care fraud convictions and
from three agency databases—HHS-                other reasons, including license revocation and program-related convictions.
OIG, USAOs, and DOJ’s Civil                     About 60 percent of those individuals and entities excluded were in the nursing
Division—and removed duplicate                  profession. Pharmacies or individuals affiliated with pharmacies were the next-
subject data. GAO also reviewed                 largest provider type excluded, representing about 7 percent of those excluded.
public court records, such as
indictments, to identify subjects’              According to data GAO collected from 10 state Medicaid Fraud Control Units
provider types because the USAOs                (MFCU), over 40 percent of the 2,742 subjects investigated for health care fraud
and DOJ Civil Division data did not             in Medicaid and CHIP in 2010 were home health care providers and health care
consistently include provider type. To          practitioners. Of the criminal cases pursued by these MFCUs, home health care
describe providers involved in fraud            providers comprised nearly 40 percent of criminal convictions and 45 percent of
cases handled by the MFCUs, GAO                 subjects sentenced in 2010. Civil health care fraud cases pursued by these
collected aggregate data from 10 state          MFCUs in 2010 resulted in judgments and settlements totaling nearly
MFCUs, which represented the                    $829 million. Pharmaceutical manufacturers were to pay more than
majority of fraud investigations,               60 percent ($509 million) of the total amount of civil judgments and settlements.
indictments, and convictions
nationwide.                                     GAO provided a draft of the report to DOJ and HHS. DOJ provided technical
View GAO-12-820. For more information,
                                                comments, which have been incorporated as appropriate.
contact Kathleen M. King at (202) 512-7114 or
kingk@gao.gov.

                                                                                         United States Government Accountability Office
Contents


Letter                                                                                         1
               Background                                                                      7
               Medical Facilities Were the Most Frequent Subjects of Criminal
                 Investigations, and Hospitals Were the Most Frequent Subjects
                 of Civil Investigations                                                     12
               Home Health Providers Were the Largest Percentage of Criminal
                 Convictions for MFCUs, and Pharmaceutical Manufacturers
                 Were Ordered to Pay the Most in Civil Cases                                 33
               Agency Comments                                                               40

Appendix I     Methodology for Analyzing Data Obtained from the Federal
               Agencies                                                                      42



Appendix II    Methodology for Selecting State Medicaid Fraud Control Units
               and Analyzing Submitted Data                                                  47



Appendix III   GAO Contact and Staff Acknowledgments                                         51



Tables
               Table 1: Agencies, Divisions, and Their Roles in Health Care Fraud
                        Investigation and Prosecution                                          8
               Table 2: Number of Subjects Investigated in Health Care Fraud
                        Cases, by Agency, 2010                                               13
               Table 3: Number and Percentage of Subjects of Health Care Fraud
                        Cases Referred to HHS-OIG, by Source of Referral, 2010               14
               Table 4: Number and Percentage of Subjects in Criminal Health
                        Care Fraud Investigations, by Provider Type, 2010                    16
               Table 5: Number and Percentage of Subjects in Criminal Health
                        Care Fraud Investigations, by Entity or Individual Provider
                        Type, 2010                                                           18
               Table 6: Number and Percentage of Subjects Investigated in
                        Criminal Health Care Fraud Cases, by Outcome of Case,
                        2010                                                                 20
               Table 7: Number and Percentage of Health Care Fraud Subjects
                        That Were Found Guilty or Pled Guilty or No Contest, by
                        Provider Type, 2010                                                  22



               Page i                            GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 8: Number and Percentage of Civil Health Care Fraud Case
         Subjects Investigated, by Provider Type, 2010                       25
Table 9: Number and Percentage of Civil Health Care Fraud Case
         Subjects Investigated, by Entity or Individual Provider
         Type, 2010                                                          27
Table 10: Number and Percentage of Subjects in Civil Health Care
         Fraud Cases, by Outcome of Case, 2010                               28
Table 11: Number and Percentage of Subjects in Civil Health Care
         Fraud Cases with Judgment for Government or Relator, or
         Settlement, or Both, by Provider Type, 2010                         30
Table 12: Number of Individuals and Entities Excluded from
         Program Participation, by Provider Type, 2010                       32
Table 13: Number of Exclusions from Program Participation by
         Reason, 2010                                                        33
Table 14: Number of Subjects of Health Care Fraud Referred to 10
         Medicaid Fraud Control Units (MFCU) for Investigation,
         by Provider Type, 2005 and 2010                                     35
Table 15: Outcomes for Subjects of Criminal Health Care Fraud
         Cases Handled by 10 Medicaid Fraud Control Units
         (MFCU), by Provider Type, 2010                                      37
Table 16: Criminal Case Sentencing Outcomes for Subjects of
         Health Care Fraud Cases Handled by 10 Medicaid Fraud
         Control Units (MFCU), by Provider Type, 2010                        38
Table 17: Civil Judgments or Settlements for Subjects of Health
         Care Fraud Cases Handled by 10 Medicaid Fraud Control
         Units (MFCU) by Provider Type, 2005 and 2010                        40
Table 18: Categories of Provider Types Developed for Analysis of
         Health Care Fraud Case Subjects                                     45
Table 19: Information about Health Care Fraud Handled by 10 State
         Medicaid Fraud Control Units (MFCU), Fiscal Year 2010               48
Table 20: Categories of Provider Types Used in Data Collection
         Instrument Sent to State Medicaid Fraud Control Units for
         Analysis of Health Care Fraud Case Subjects                         49




Page ii                          GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Abbreviations


CHIP              Children’s Health Insurance Program
CMS               Centers for Medicare & Medicaid Services
DOJ               Department of Justice
EOUSA             Executive Office of U.S. Attorneys
FCA               False Claims Act
FBI               Federal Bureau of Investigation
HHS               Department of Health and Human Services
HHS-OIG           Department of Health and Human Services’ Office of
                   Inspector General
MFCU              Medicaid Fraud Control Unit
PACER             Public Access to Court Electronic Records
PPACA             Patient Protection and Affordable Care Act
USAO              U.S. Attorney’s Office




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Page iii                                 GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
United States Government Accountability Office
Washington, DC 20548




                                   September 7, 2012

                                   The Honorable Harry Reid
                                   Majority Leader
                                   United States Senate

                                   The Honorable Max Baucus
                                   Chairman
                                   Committee on Finance
                                   United States Senate

                                   The Honorable Tom Harkin
                                   Chairman
                                   Committee on Health, Education, Labor, and Pensions
                                   United States Senate

                                   In fiscal year 2011, 48.4 million individuals were enrolled in Medicare;
                                   55.6 million in Medicaid; and 8.7 million in the Children’s Health Insurance
                                   Program (CHIP). 1 Together, these programs accounted for approximately
                                   $849.2 billion in federal expenditures. 2 The federal government allocated
                                   at least $608 million in funding to investigate and prosecute cases of
                                   alleged health care fraud in health care programs that year. 3 Many
                                   different types of providers and suppliers who serve Medicare, Medicaid,


                                   1
                                    The Centers for Medicare & Medicaid Services (CMS)—an agency within the Department
                                   of Health and Human Services (HHS)—oversees Medicare, Medicaid, and CHIP.
                                   Medicare is the federal health insurance program for persons aged 65 or over, certain
                                   disabled individuals, and individuals with end-stage renal disease. Medicaid and CHIP are
                                   joint federal-state programs that finance health insurance coverage for certain categories
                                   of low-income adults and children.
                                   2
                                    In fiscal year 2011, Medicare expenditures totaled approximately $565.6 billion; federal
                                   Medicaid expenditures were nearly $275 billion; and federal expenditures for CHIP were
                                   about $8.6 billion.
                                   3
                                    Fraud involves an intentional act or representation to deceive with the knowledge that the
                                   action or representation could result in gain. The Health Care Fraud and Abuse Control
                                   Program received just over $608 million in fiscal year 2011. See Department of Health and
                                   Human Services and Department of Justice, Health Care Fraud and Abuse Control
                                   Program Annual Report for Fiscal Year 2011: February 2012. The program, which is
                                   under the joint direction of the Attorney General and the Secretary of HHS, is designed to
                                   coordinate federal, state, and local law enforcement activities with respect to health care
                                   fraud and abuse. Additional funds to combat health care fraud spent by HHS and the
                                   Department of Justice (DOJ) are not included in this figure.




                                   Page 1                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
and CHIP beneficiaries are subjects of fraud cases, including physicians,
hospitals, durable medical equipment suppliers, home health agencies,
and pharmacies. 4 Because their size and complexity make them
vulnerable to fraud, we have designated Medicare and Medicaid as high-
risk programs. 5 According to the Department of Health 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, misreporting data to increase
payments, paying kickbacks to providers for referring beneficiaries for
specific services or to certain entities, and stealing providers’ or
beneficiaries’ identities.

The Centers for Medicare & Medicaid Services (CMS)—an agency within
the Department of Health and Human Services (HHS) that oversees
Medicare, Medicaid, and CHIP—along with HHS-OIG, and the
Department of Justice (DOJ)—including the Federal Bureau of
Investigation (FBI)—work together to investigate and prosecute alleged
fraud in Medicare, Medicaid, and CHIP. For example, CMS, HHS-OIG,
and DOJ officials comprise Medicare Strike Force teams, which are
designed to use data analysis techniques to identify and stop Medicare
fraud. Additionally, these agencies coordinate with state Medicaid Fraud
Control Units (MFCU), which are primarily responsible for investigating
and prosecuting fraud within their state Medicaid programs.

HHS-OIG, FBI, and MFCUs receive referrals of alleged fraud from a
variety of sources, including program beneficiaries, state agencies, law
enforcement, and whistleblowers. CMS and its contractors report alleged
fraud cases to HHS-OIG for investigation. HHS-OIG typically refers
investigations of the alleged fraud cases that it believes have merit to
DOJ for civil litigation or criminal prosecution because it does not have
the authority to prosecute health care fraud cases. MFCUs—which are
generally located in the state offices of the Attorney General—investigate
and typically prosecute health care fraud cases under state laws.
Additionally, MFCUs coordinate with HHS-OIG and DOJ on certain fraud



4
 Subjects of health care fraud cases can be individuals, such as a dentist or a nurse; an
organization, such as a pharmaceutical manufacturer; or a facility, such as a hospital.
5
 See GAO, High-Risk Series: An Update, GAO-11-278 (Washington, D.C.: February
2011).




Page 2                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
cases. DOJ and its divisions may also receive referrals of alleged fraud
through civil cases filed by individuals under the False Claims Act (FCA).
The outcomes of health care fraud cases can include civil and criminal
penalties. 6 Civil penalties include monetary settlements, and criminal
penalties include incarceration sentences, fines, and restitution. HHS-OIG
also can impose administrative penalties on providers—including
imposing a civil monetary penalty, or excluding a provider from
participating in federal health care programs. In fiscal year 2011, the
federal government won or negotiated approximately $2.4 billion in
judgments and settlements related to health care fraud. 7

Concerns have been raised about the need to better detect and combat
fraud in federal health care programs, such as Medicare, Medicaid, and
CHIP. Some of these concerns have specifically focused on determining
whether resources to fight fraud are being targeted toward the types of
health care providers committing the most fraud. This report provides
information on individuals or entities involved in health care fraud cases in
Medicare, Medicaid, and CHIP. These individuals and entities are
generally referred to as “subjects” of health care fraud cases. In this
report, we identify: (1) subjects of health care fraud cases by provider
type involving Medicare, Medicaid, or CHIP that were handled by federal
agencies, and changes in the types of providers in 2005 and 2010; and
(2) subjects of health care fraud cases by provider type for those cases
involving Medicaid or CHIP that were handled by MFCUs, and changes in
the types of providers investigated in fraud cases in 2005 and 2010.

To identify subjects of health care fraud cases—including referrals,
investigations, prosecutions, and outcomes—by provider type for cases
involving Medicare, Medicaid, or CHIP that were handled by federal
agencies, and to examine changes in the types of provider in 2005 and
2010, we obtained data on closed health care fraud cases from HHS-
OIG, DOJ’s Civil Division, and the Executive Office of U.S. Attorneys



6
 In this report, we use the term outcome to refer to the disposition of civil and criminal
cases, which can include, among other things, convictions, monetary penalties,
dismissals, and the decision not to pursue investigation or prosecution.
7
 We have previously reported that although there have been convictions for multimillion
dollar schemes that defrauded the Medicare program, the extent of the problem is
unknown. There are no reliable estimates of the extent of fraud in the Medicare program
or for the health care industry as a whole. See GAO, Medicare: Progress Made to Deter
Fraud, but More Could Be Done, GAO-12-801T (Washington, D.C.: June 8, 2012).




Page 3                                     GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
(EOUSA), which provides administrative support for the 94 U.S.
Attorney’s Offices (USAO). 8 We obtained data on fraud cases involving
Medicare, Medicaid, and CHIP—including any cases that were closed in
calendar years 2005 and 2010. 9 However, due to limitations with some of
the 2005 data, our analysis of the changes in the types of providers in
2005 and 2010 is limited. Each fraud case can have more than one
subject, and our analysis focuses on the subjects of the fraud cases
rather than the cases themselves. Additionally, a fraud subject can be
either an entity itself or an individual affiliated with an entity. 10 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 also include 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. Since many fraud cases are handled jointly by HHS-
OIG, USAOs, and DOJ’s Civil Division (and entered into each agency’s
own database), we identified fraud case subjects that were in more than
one data set we received by comparing subject information to the extent


8
 The USAOs are a division within DOJ that litigates both civil and criminal health care
fraud cases in their districts throughout the country. Although the Federal Bureau of
Investigation (FBI) investigates health care fraud and DOJ’s Criminal Division prosecutes
health care fraud, we did not obtain data from them because officials told us that the FBI
and DOJ’s Criminal Division primarily work on health care fraud cases jointly with the
HHS-OIG or USAOs. Officials indicated that the vast majority of health care fraud cases
handled by FBI and DOJ’s Criminal Division would be entered in databases used either by
HHS-OIG or USAOs. As a result, we did not request data from DOJ’s Criminal Division or
the FBI.
9
 We chose calendar year 2010 since HHS-OIG and DOJ and its divisions received
additional funding for health care fraud activities in fiscal year 2010 and it was the most-
recent complete year of data available at the time of our request. We chose calendar year
2005 to compare data we received for 2010 because this was before the Deficit Reduction
Act was enacted, which increased funding for antifraud activities. We use the term “cases”
throughout this report to refer to any suspected fraud information that was received by
HHS-OIG, USAOs, or DOJ’s Civil Division regardless of whether the case was formally
investigated or prosecuted. Additionally, we refer to any cases received by HHS-OIG as
investigations regardless of the level of resources expended on the case.
10
  For example, the subject of a fraud case could be a durable medical equipment supplier
because the company billed for equipment that it did not provide, or could be an individual
affiliated with the entity, such as an employee of a durable medical equipment supplier
that billed for equipment not prescribed by a physician. In both of these examples, the
entity involved is the durable medical equipment supplier, but in the first example the
subject is the entity itself while in the second example the subject is an individual affiliated
with the durable medical equipment supplier. In our analysis, we refer to subjects of fraud
cases as the entities they are or the entities with which the individuals are affiliated.




Page 4                                     GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
possible. However, it is possible that our analysis still includes some
duplication in fraud case subjects. With the exception of one analysis at
the agency level, we excluded duplicate data so that each subject was
only included once. The data we received from HHS-OIG contained
information on the provider type of the subject; provider type is not a
required field in the USAOs database, consequently, the USAOs do not
consistently have provider type information, and DOJ’s Civil Division does
not collect data by provider type. In order to identify the provider type of
subjects in the USAO and DOJ Civil Division data that were missing
information, it was necessary for us to conduct an extensive search of
publicly available court records to identify the provider type for 2,470
subjects. We searched for the subjects in the Public Access to Court
Electronic Records (PACER) database and reviewed indictments, plea
agreements, and other court documents to obtain information on the
subject’s provider type. 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 aggregated the various
provider types into broad categories, which are described in appendix I.
We also reviewed agency documents and conducted interviews with
officials from HHS-OIG and DOJ—including the Civil and Criminal
Divisions, FBI, and EOUSA—to obtain information about health care
fraud cases and the databases used to track these cases. To assess the
reliability of the data, we interviewed officials from these agencies to
discuss the quality of the data we obtained, 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 (see app. I for additional information about our
methodology).

To identify subjects of health care fraud cases by provider type for those
cases involving Medicaid or CHIP that were handled by state MFCUs,
and to examine changes in the types of providers investigated and
prosecuted for fraud in 2005 and 2010, we collected aggregate data on
closed fraud cases from 10 state MFCUs for 2005 and 2010. These
MFCUs were selected because, collectively, they accounted for the
majority of open fraud investigations, fraud indictments or charges, fraud
convictions, amounts recovered from civil settlements and judgments,
MFCU grant expenditures, and number of MFCU staff in fiscal year




Page 5                            GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
2010. 11 The 10 selected MFCUs were in California, Florida, Illinois,
Indiana, Louisiana, Massachusetts, New York, Ohio, Texas, and
Virginia. 12 We developed a standardized data-collection instrument based
on the HHS-OIG’s Quarterly Statistical MFCU Report Template and
accompanying definitions. We received feedback on a draft of the data-
collection instrument from officials from two MFCUs before finalizing it.
Although the data we received from the 10 MFCUs represent a majority of
fraud cases handled by all MFCUs nationwide, the data are not
generalizable to other states. The data we received represented actions
related to fraud cases that occurred only in the years we requested. 13
Each instance of fraud in the data submitted by the 10 MFCUs represents
one individual, facility, or organization that we refer to as the subject of
the fraud case. Fraud case subjects may be an individual, such as a
dentist or a nurse; an organization, such as a pharmaceutical
manufacturer; or a facility, such as a hospital. Several subjects may be
investigated in one fraud case; however, each subject in a fraud case is
counted separately. Additionally, for our analysis, we aggregated various
provider types into broad categories, which are described in appendix II.
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 also conducted interviews with officials from CMS, the HHS-OIG’s
Office of Evaluations and Inspections, and the National Association of
MFCUs to obtain information on fraud cases handled by the MFCUs. 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. On the basis of these activities, we determined these data




11
  Nationwide, in fiscal year 2010 the selected state MFCUs accounted for 54.8 percent of
open fraud investigations; 60.1 percent of fraud indictments and charges; 62.8 percent of
fraud convictions; 40.6 percent of civil settlements and judgments; 66.0 percent of MFCU
grant expenditures; and 64.1 percent of MFCU staff.
12
  We did not receive complete CHIP fraud data from Florida, New York, and Texas
because the MFCUs in these states do not investigate fraud in CHIP. In the other seven
states, data on CHIP fraud were included.
13
  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.




Page 6                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                            were sufficiently reliable for the purpose of our report (see app. II for
                            additional information).

                            We conducted this performance audit from June 2011 to September 2012
                            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 any findings and
                            conclusions based on our audit objectives.


                            Medicare, Medicaid, and CHIP beneficiaries receive health care from a
Background                  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     Medicare, Medicaid, and CHIP beneficiaries receive health care from a
CHIP Health Care            variety of providers—including physicians, nurses, dentists, and other
Providers                   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   Several agencies are involved in investigating and prosecuting health
and Prosecute Health Care   care fraud cases, including the HHS-OIG; DOJ’s Civil and Criminal
Fraud                       divisions; the 94 USAOs; the FBI; and state MFCUs. The HHS-OIG and
                            FBI primarily conduct investigations of health care fraud, and DOJ’s




                            Page 7                             GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                                 divisions typically prosecute or litigate those cases. 14 See table 1 for
                                                 additional information about the role of each agency in fraud
                                                 investigations and prosecutions.

Table 1: Agencies, Divisions, and Their Roles in Health Care Fraud Investigation and Prosecution

Agency                Division                                   Role in investigating and prosecuting health care fraud
Department of         Office of Investigations                   Responsible for conducting and coordinating investigations into allegations of
Health and Human                                                 fraud in HHS programs, including Medicare, Medicaid, and CHIP. They are
Services’ Office of                                              also responsible for certain exclusions of providers from participating in
Inspector General                                                federal health care programs.
(HHS-OIG)                                                        HHS-OIG investigators also play an active role in the Medicare Strike Force
                                                                 teams—which are teams comprising staff from federal, state, and local
                                                                 investigation agencies, designed to combat Medicare fraud by using data-
                                                                 analysis techniques—located in nine cities nationwide.
                      Office of Counsel to the Inspector Has the authority to impose administrative penalties related to health care
                      General                            fraud, including civil monetary penalties.
Department of         Criminal Division                          Prosecutes criminal health care fraud. DOJ’s Criminal Division also plays an
              a
Justice (DOJ)                                                    active role in the Medicare Strike Force teams.
                      Civil Division                             Represents the U.S. government in civil matters, such as cases brought
                                                                 against pharmaceutical manufacturers for marketing prescription drugs for
                                                                 uses other than what have been approved. DOJ’s Civil Division also has the
                                                                 authority to bring criminal charges against pharmaceutical and medical device
                                                                 manufacturers for, among other things, unlawful off-label marketing under the
                                                                 Federal Food, Drug, and Cosmetic Act.
                      U.S. Attorney’s Offices (USAO)             Litigate or prosecute civil and criminal health care fraud cases in their
                                                                 districts—94 USAOs throughout the country. The USAOs in the nine cities
                                                                 where Medicare Strike Force teams are located also participate in those
                                                                 teams.
                      Federal Bureau of Investigation            Investigates health care fraud through coordinated initiatives with federal,
                      (FBI)                                      state, and local agencies. The FBI also participates in task forces, and
                                                                 undercover operations to identify health care fraud, as well as the Medicare
                                                                 Strike Force teams.
Medicaid Fraud        Each state and the District of             Investigate and typically prosecute civil and criminal health care fraud in the
                                                   b
Control Unit          Columbia has its own MFCU                  state’s Medicaid program. The MFCUs also investigate cases of patient
(MFCU)                                                           abuse and neglect. Although MFCUs typically work on Medicaid fraud cases,
                                                                 they may obtain permission from HHS-OIG to investigate fraud in Medicare.
                                                                 MFCUs are required to be separate and distinct from the state Medicaid
                                                                 agencies and receive state and federal Medicaid funds.
                                                 Source: GAO analysis of information from the HHS-OIG, DOJ and its divisions, and MFCUs.




                                                 14
                                                   CMS and its contractors also conduct activities related to health care fraud. For
                                                 example, CMS oversees the work of Zone Program Integrity Contractors, which are
                                                 responsible for investigating potential fraud in Medicare fee-for-service in their assigned
                                                 geographic area. These contractors identify suspect claims and provider billing patterns,
                                                 investigate fraud leads, and refer suspected fraud cases to HHS-OIG.




                                                 Page 8                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
a
 DOJ’s Civil Rights Division may also conduct activities related to health care fraud though they
investigate conditions of confinement at state and local residential institutions.
b
North Dakota received a waiver from the federal government and does not operate a MFCU.


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). 15 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
programs. 16 Similarly, DOJ’s divisions may choose not to pursue a fraud
case for a number of reasons, including a lack of evidence or insufficient




15
  The False Claims Act (FCA) prohibits certain actions, including the knowing presentation
of a false claim for payment by the federal government. 31 U.S.C. § 3729(a)(1)(A). FCA
claims may be brought by private persons—“relators” or “whistleblowers”—in the name of
the government, alleging the submission of false claims. A qui tam case is a civil action
brought by the relator for the person and for the government though the action is in the
name of the government. In these qui tam cases, the relator can receive a portion of a
monetary settlement, and reasonable expenses and attorneys’ fees and costs. 31 U.S.C.
§ 3730(b),(d).
16
  Providers and individuals can be excluded for a variety of reasons other than for a
health care fraud conviction, including licensure suspension, surrender, or revocation,
patient abuse/neglect conviction, or felony controlled substance conviction. Under
section 1128 of the Social Security Act, exclusions from federal health programs are
mandatory under certain circumstances and permissive in others. 42 U.S.C. § 1320a-7.




Page 9                                        GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                     evidence to support the charges, or a lack of resources for investigation
                     or prosecution. 17

                     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   Several statutes concern health care fraud. 18 These statutes include the
Outcomes             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. 19 The Social Security Act also provides for criminal
                           penalties for knowing and willful false statements in applications for
                           payment. 20 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. 21 For example, a payment program


                     17
                       DOJ has to review and decide whether to intervene in qui tam cases within a statutorily
                     specified amount of time.
                     18
                       The statutes included here provide examples of those that may be relevant to health
                     care fraud cases. Other statutory provisions, including those located in title 18 of the
                     United States Code, may also be relevant to such cases. See, e.g., 18 U.S.C. §§ 669
                     (concerning theft or embezzlement in connection with health care ), 1035 (concerning
                     false statements relating to health care matters), and 1347 (concerning health care fraud).
                     19
                         42 U.S.C. § 1320a-7a.
                     20
                         42 U.S.C. § 1320a-7b.
                     21
                         42 U.S.C. § 1320a-7b(b).




                     Page 10                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
      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 22 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. 23

•     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. 24

•     The False Claims Act (FCA) is often used by the federal government
      in health care fraud cases. 25 The FCA prohibits certain actions,
      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 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


22
  The Social Security Act prohibits payments to states for Medicaid services that would be
prohibited by Medicare under the Stark law. 42 U.S.C. § 1396b(s).
23
    42 U.S.C. § 1395nn(a)(1).
24
    21 U.S.C. § 331(a).
25
    31 U.S.C. §§ 3729-3733.




Page 11                                 GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                             programs. In some cases, a subject may receive both civil and criminal
                             penalties, and be excluded.


                             According to 2010 data, 10,187 subjects were investigated for health care
Medical Facilities           fraud. Medical facilities (such as medical centers, clinics, and medical
Were the Most                practices) and durable medical equipment suppliers were the most
                             frequent subjects of criminal fraud cases in 2010. Hospitals and medical
Frequent Subjects of         facilities were the most frequent subjects of civil fraud cases, including
Criminal                     cases that resulted in judgments or settlements. Nearly 2,200 individuals
Investigations, and          were excluded from program participation by HHS-OIG, about 60 percent
                             of whom were in the nursing profession.
Hospitals Were the
Most Frequent
Subjects of Civil
Investigations
Approximately 10,200         According to 2010 data, 10,187 subjects were investigated for health care
Subjects Were Investigated   fraud—of which, 7,848 were subjects of criminal fraud cases, and 2,339
for Health Care Fraud in     were subjects of civil fraud cases. Data from 2010 shows that HHS-OIG
                             investigated health care fraud cases for nearly 8,900 subjects, many
2010                         more than were opened by the USAOs and DOJ’s Civil Division. 26 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.




                             26
                              As previously mentioned, each fraud case can have more than one subject involved.
                             According to 2010 data, there were 4,709 criminal cases and 1,024 civil cases.




                             Page 12                               GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 2: Number of Subjects Investigated in Health Care Fraud Cases, by Agency, 2010

Agency                                                                 Subjects of criminal cases                    Subjects of civil cases                      Total
HHS-OIG                                                                                                7,270                                    1,606            8,876
USAOs                                                                                                     877                                     545            1,422
DOJ’s Civil Division                                                                                       n/a                                    445               445
    Subjects that were included in more than one agency
             a
    database                                                                                            (299)                                   (257)             (556)
Unique count of subjects investigated in fraud cases                                                   7,848                                    2,339           10,187
                                          Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG), Department of Justice’s
                                          (DOJ) U.S. Attorneys’ Offices (USAO), and DOJ’s Civil Division data.

                                          Notes: Data in this table are for calendar year 2010. The data from HHS-OIG pertained only to health
                                          care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP); however,
                                          data from the USAOs and DOJ’s Civil Division may also include other health care fraud.
                                          DOJ’s Civil Division handles civil health care fraud cases and has the authority to bring criminal
                                          charges against pharmaceutical and medical device manufacturers under the Federal Food, Drug,
                                          and Cosmetic Act.
                                          a
                                           Health care fraud data reported in this table contain duplicate information for some subjects of the
                                          fraud cases because fraud cases are often jointly handled by HHS-OIG, USAOs, and DOJ’s Civil
                                          Division, and information about these cases are entered into each agency’s own database. We
                                          excluded duplicate information for subjects that we identified in more than one agency database so
                                          that each subject was only included once in our analysis.


                                          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). 27 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.)




                                          27
                                            The data we received from the USAOs and DOJ’s Civil Division did not contain
                                          information on the source of the fraud case. However, officials from DOJ indicated that
                                          they generally receive fraud cases from HHS-OIG, the FBI, or from relators who have filed
                                          claims under the False Claims Act.




                                          Page 13                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 3: Number and Percentage of Subjects of Health Care Fraud Cases Referred to HHS-OIG, by Source of Referral, 2010

                                                                                  Criminal                 Civil               Total           Percentage of total
Federal law enforcement                                                                3,022                 337               3,359                        37.8%
CMS program integrity contractors                                                      1,113                 122               1,235                         13.9
State, local, or tribal law enforcement agency                                           805                   62                 867                          9.8
Current or former employees of providers                                                 783                   53                 836                          9.4
Individuals who are unaffiliated                                                         778                   44                 822                          9.3
          a
Qui Tam                                                                                    71                684                  755                          8.5
Other                                                                                    486                 128                  614                          6.9
State, local, or tribal non-law-enforcement agency                                       203                   54                 257                          2.9
                  b
Self-disclosure                                                                              9               122                  131                          1.5
Total                                                                                  7,270              1,606                8,876                        100%
                                             Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG) data.

                                             Notes: The data included in this table represent information about the source of the fraud case, which
                                             can include more than one subject and are for calendar year 2010. The data from HHS-OIG pertained
                                             only to health care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).
                                             a
                                                 Qui tam cases are brought under the False Claims Act by a private citizen.
                                             b
                                                 Self-disclosure refers to cases where providers report any improper actions to HHS-OIG themselves.




Medical Facilities and                       About 49 percent of criminal health care fraud subjects were, or were
Durable Medical                              affiliated with, medical facilities (such as medical practices, clinics, or
Equipment Suppliers Were                     centers), durable medical equipment suppliers, and home health
                                             agencies. Of the 7,848 subjects associated with criminal cases, about
the Most Frequent                            1,100 were charged, and 85 percent of those charged were found guilty
Subjects of Criminal Fraud                   or pled guilty or no contest. Of those subjects who were found guilty or
Cases in 2010                                pled guilty or no contest, about 37 percent were medical facilities and
                                             durable medical equipment suppliers.




                                             Page 14                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Criminal Health Care Fraud   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. 28 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.




                             28
                               Subjects of the fraud cases could be the entities themselves, such as a durable medical
                             equipment supplier that billed for equipment that it did not provide, or individuals affiliated
                             with an entity, such as an employee of a durable medical equipment supplier that billed for
                             equipment not prescribed by a physician. In both of these cases, the entity involved is the
                             durable medical equipment supplier, but in the first example the subject is the entity itself
                             while in the second example the subject is an individual affiliated with the durable medical
                             equipment supplier. We generally refer to the subjects of fraud cases as the entities with
                             which they are affiliated.




                             Page 15                                    GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 4: Number and Percentage of Subjects in Criminal Health Care Fraud
Investigations, by Provider Type, 2010

                                                           Number of subjects of                  Percentage of total
                                                                 criminal cases                       criminal cases
    Medical facilities
         Medical practices                                                          1,101
                                                                                                                      24.3%
         Medical centers or clinics                                                    807
    Durable medical equipment suppliers                                             1,275                                  16.2
    Home health agencies                                                               639                                  8.1
    Other centers, clinics, or facilities                                              598                                  7.6
    Hospitals                                                                          357                                  4.5
    Pharmacies                                                                         321                                  4.1
    Nursing homes                                                                      253                                  3.2
    Management service providers                                                       209                                  2.7
    Medical transportation companies                                                   200                                  2.5
    Other                                                                              162                                  2.1
    Mental health centers or clinics                                                   122                                  1.6
    Government employees, contractors, or grantees                                     103                                  1.3
    Insurance companies                                                                  79                                 1.0
    Dental clinics or practices                                                          55                                 0.7
    Pharmaceutical manufacturers or suppliers                                            38                                 0.5
    Medical supply companies                                                             18                                 0.2
    Unknown affiliation
         Health care providers                                                         779
                       a
         Individuals                                                                   668                                 19.2
         Data unavailable                                                                64
    Total                                                                           7,848
Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG) and Department of
Justice’s (DOJ) U.S. Attorneys’ Offices (USAO) data.

Notes: Data in this table are for calendar year 2010. The data from HHS-OIG pertained only to health
care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP); however,
data from the USAOs may also include other health care fraud.
Each unique subject is only counted once in this table. We identified 299 subjects of criminal cases
that were duplicate subjects in the 2010 data. We removed these duplicate subjects from the analysis
reported here.
For the subjects in the DOJ’s USAO data, we identified the provider type using the court documents
obtained from the Public Access to Court Electronic Records (PACER) database.
a
 Individuals whose affiliation was unknown include some who were not health care providers. For
example, this category includes individuals who were investigated for health care fraud because they
obtained illegal prescription drugs from physicians or pharmacies.




Page 16                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
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.




Page 17                          GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 5: Number and Percentage of Subjects in Criminal Health Care Fraud
Investigations, by Entity or Individual Provider Type, 2010

                                                                                Number of                 Percentage of
                                                                               subjects of                 total criminal
                                                                            criminal cases                         cases
    Entities
        Durable medical equipment suppliers                                                  819
        Home health agencies                                                                 507
        Medical centers or clinics                                                           506
        Medical practices                                                                    486
        Hospitals                                                                            336
                                                                                                                      49.2%
        Other centers, clinics, or facilities                                                330
        Nursing homes                                                                        202
        Pharmacies                                                                           196
        Other entities                                                                       482
               Entities subtotal                                                          3,864
    Individuals
        Physicians                                                                        1,208                            15.4
        Management employees
               Durable medical equipment suppliers                                           420
               Medical centers or clinics                                                    185
                                                                                                                           13.6
               Home health agencies                                                            85
               Other entities                                                                375
        Employees                                                                            517                            6.6
        Individuals that were not affiliated with an
        entity and were not health care providers                                            344                            4.4
        Recipients and beneficiaries                                                         258                            3.3
        Nurses, nurses’ aides, or health care aides                                          166                            2.1
                a
        Other                                                                                426                            5.4
               Individuals subtotal                                                       3,984
    Total                                                                                 7,848
Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG) and Department of
Justice’s (DOJ) U.S. Attorneys’ Offices (USAO) data.

Notes: Data in this table are for calendar year 2010. For the subjects in the Department of Justice’s
U.S. Attorneys’ Offices data, we identified the provider type using the court documents obtained from
the Public Access to Court Electronic Records (PACER) database. The data from HHS-OIG pertained
only to health care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP);
however, data from the USAOs may have also included other health care fraud.
a
 This category includes pharmacists, psychologists, therapists, counselors, physician assistants,
dentists, and other individuals.




Page 18                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Changes in Provider Types in   Our data show that 2010 criminal cases involved 2,300 more subjects
2005 and 2010                  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.

Outcomes for the Subjects of   Most of the 7,848 subjects who were investigated for criminal fraud in
Criminal Fraud Cases from      2010 were not pursued—meaning that HHS-OIG did not refer the
2010 Data                      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.




                               Page 19                          GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 6: Number and Percentage of Subjects Investigated in Criminal Health Care Fraud Cases, by Outcome of Case, 2010

                                                                                       Number of           Number of subjects                     Percentage of total
                                                                                        subjects                 by category                    subjects by category
                              a
Subjects that were charged
    Found guilty or pled guilty or no contest                                                    925
    Acquitted                                                                                      13
                                                                                                                                 1,086                                   14%
    Subject’s case was dismissed                                                                 102
    Other outcome, such as pretrial diversion                                                      46
                                             b
Subjects whose cases were not pursued
    Lack of resources                                                                          2,219
    Lack of sufficient evidence or insufficient details                                          904
    Subject’s case did not meet guidance, was outside of
    HHS-OIG jurisdiction, or violation occurred outside of
                                                                                                                                 6,700                                      85
    HHS-OIG’s region                                                                             338
    Subject already under investigation or investigated in
    another case                                                                                 336
                    c
    Other reasons                                                                              2,903
Subjects who appealed their original cases
    Appeal was dismissed by appellant                                                                5
    Appeal decision was favorable for the U.S. government                                          55                                62                                          1
    Appeal decision was not favorable for the U.S. government                                        2
Total                                                                                          7,848
                                                 Source: GAO analysis of data obtained from Department of Health and Human Services’ Office of Inspector General (HHS-OIG) and
                                                 Department of Justice’s (DOJ) U.S. Attorneys’ Office (USAO).

                                                 Notes: Data in this table are for calendar year 2010. The data from HHS-OIG pertained only to health
                                                 care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP); however,
                                                 data from the USAOs may have also included other health care fraud.
                                                 a
                                                  Subjects in this section were involved in cases that were pursued, meaning that the USAOs received
                                                 the case and took some sort of action on it. For example, in some cases, the USAO received the
                                                 case and decided to dismiss the charges while in others the USAO prosecuted the case and the
                                                 subject was found guilty.
                                                 b
                                                  Subjects in this section were from cases that were not pursued further than the case being received
                                                 or investigated by HHS-OIG. For these cases, HHS-OIG did not refer them to the USAOs for
                                                 prosecution for the reasons included in this section of the table.
                                                 c
                                                  Other reasons include that the allegations in the case did not constitute a violation or the criminal
                                                 case was closed to pursue a civil case, impose a civil monetary penalty, or exclude the provider.
                                                 Some subjects had their cases closed by HHS-OIG rather than referring the case to the USAOs for
                                                 prosecution for undetermined reasons.




                                                 Page 20                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
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). 29

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.




29
  Subjects involved in cases where there was another outcome included subjects that had
pretrial diversions, were charged in other cases, or were involved in cases that were
transferred to another district.




Page 21                                GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 7: Number and Percentage of Health Care Fraud Subjects That Were Found
Guilty or Pled Guilty or No Contest, by Provider Type, 2010

                                                                                                 Percentage of total
                                                              Number of subjects                 number of subjects
                                                                  that were found                    that were found
                                                              guilty or pled guilty              guilty or pled guilty
                                                                     or no contest                      or no contest
 Medical facilities
       Medical centers or clinics                                                      130
                                                                                                                      18.7%
       Medical practices                                                                 43
 Durable medical equipment suppliers                                                   171                                 18.5
 Other centers, clinics, or facilities                                                   58                                 6.3
 Other                                                                                   49                                 5.3
 Home health agencies                                                                    42                                 4.5
 Pharmacies                                                                              40                                 4.3
 Management service providers                                                            33                                 3.6
 Nursing homes                                                                           14                                 1.5
 Medical transportation companies                                                        14                                 1.5
 Pharmaceutical manufacturers or suppliers                                                9                                 1.0
 Mental health centers, clinics, or facilities                                            9                                 1.0
 Medical supply companies                                                                 8                                 0.9
 Insurance companies                                                                      5                                 0.5
 Dental clinics or practices                                                              4                                 0.4
 Government employees, contractors, or grantees                                           3                                 0.3
 Hospitals                                                                                2                                 0.2
 Unknown affiliation
       Individuals                                                                     220
       Health care providers                                                             52                                31.6
       Data unavailable                                                                  19
 Total                                                                                 925
Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG) and Department of
Justice’s (DOJ) U.S. Attorneys’ Offices (USAO).

Notes: Data in this table are for calendar year 2010. For the subjects in the DOJ’s USAO data, we
identified the provider type using the court documents obtained from the Public Access to Court
Electronic Records database. The data from HHS-OIG pertained only to health care fraud in
Medicare, Medicaid, and the Children’s Health Insurance Program; however, data from the USAOs
may have also included other health care fraud.




Page 22                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Of the 925 subjects who were found guilty or pled guilty or no contest,
60 percent were sentenced to incarceration, 30 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.




30
  An official at HHS-OIG told us that it captures information on whether the subjects were
sentenced to be incarcerated but does not capture information on whether the subjects
were sentenced to serve that term in jail or prison, and a USAO official indicated that
subjects sentenced to incarceration serve those sentences in prison.




Page 23                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                             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. 31


Hospitals and Medical        According to 2010 civil case data for health care fraud, 2,339 subjects
Facilities Were the Most     were investigated in civil cases. Hospitals represented nearly 20 percent
Frequent Subjects of Civil   of these subjects, and medical facilities about 18 percent. Civil cases
                             involving approximately 1,100 subjects were pursued—meaning that the
Fraud Cases, Including       USAOs or DOJ’s Civil Division received the cases and took some sort of
Cases That Resulted in       action, such as litigating the case; and of those, 55 percent resulted in a
Judgments or Settlements     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.

Civil Health Care Fraud      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.)




                             31
                               According to 2010 data from HHS-OIG, subjects of criminal cases were ordered to pay
                             about $395 million in fines and $565 million in restitution. Although the subjects were
                             ordered to pay these amounts, the amounts actually recovered from them may be less
                             than what was ordered. HHS-OIG also receives recoveries, which is money returned
                             administratively—such as through self-disclosure, demand letters, or prepayment prior to
                             disposition—rather than settlements or judgments.




                             Page 24                                 GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 8: Number and Percentage of Civil Health Care Fraud Case Subjects
Investigated, by Provider Type, 2010

                                                                        Number of subjects    Percentage of
                                                                             of civil cases total civil cases
 Hospitals                                                                                      455                     19.5%
 Medical facilities
       Medical practices                                                                        218
                                                                                                                          17.7
       Medical centers or clinics                                                               197
 Other centers, clinics, or facilities                                                          145                         6.2
 Home health agencies                                                                           120                         5.1
 Pharmaceutical manufacturers or suppliers                                                      108                         4.6
 Durable medical equipment suppliers                                                            102                         4.4
 Management service providers                                                                   101                         4.3
 Nursing homes                                                                                  100                         4.3
 Pharmacies                                                                                       75                        3.2
 Insurance companies                                                                              74                        3.2
 Other                                                                                            55                        2.4
 Mental health centers, clinics, or facilities                                                    42                        1.8
 Government employees, contractors, or
 grantees                                                                                         32                        1.4
 Dental clinics or practices                                                                      31                        1.3
 Medical transportation companies                                                                 29                        1.2
 Medical supply companies                                                                         25                        1.1
 Unknown affiliation
       Data unavailable or incomplete                                                           218
       Health care providers                                                                    190                       18.3
       Individuals                                                                                22
 Total                                                                                        2,339
Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG), Department of Justice’s
(DOJ) U.S. Attorneys’ Offices (USAO), and DOJ’s Civil Division data.

Notes: Data in this table are for calendar year 2010. The data from HHS-OIG pertained only to health
care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP); however,
data from the USAOs and DOJ’s Civil Division may have also included other health care fraud.
Fraud cases are often jointly handled by HHS-OIG, USAOs, and DOJ’s Civil Division. As a result, the
data we received contain duplicate information for some of the subjects of fraud cases. We identified
257 subjects of civil cases that were duplicate subjects in the 2010 data and removed these duplicate
subjects from the analysis reported here.
For the subjects in the USAOs and DOJ’s Civil Division data, we identified the provider type using the
court documents obtained from the Public Access to Court Electronic Records (PACER) database.




Page 25                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
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.)




Page 26                            GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                  Table 9: Number and Percentage of Civil Health Care Fraud Case Subjects
                                  Investigated, by Entity or Individual Provider Type, 2010

                                                                                                          Number of subjects    Percentage of
                                                                                                               of civil cases total civil cases
                                      Entities
                                          Hospitals                                                                               432
                                          Medical centers or clinics                                                              121
                                          Medical practices                                                                       121
                                          Pharmaceutical manufacturers or suppliers                                               108
                                          Home health agencies                                                                      91
                                                                                                                                                          60.6%
                                          Nursing homes                                                                             83
                                          Durable medical equipment suppliers                                                       82
                                          Management service providers                                                              82
                                          Other entities                                                                          298
                                                 Entities subtotal                                                              1,418
                                      Individuals
                                          Physicians                                                                              284                       12.1
                                          Management employees                                                                    194                         8.3
                                          Employees                                                                                 94                        4.0
                                          Nurses, nurses’ aides, or health care aides                                               29                        1.2
                                                  a
                                          Other                                                                                   320                       13.7
                                                 Individuals subtotal                                                             921
                                      Total                                                                                     2,339
                                  Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG), Department of Justice’s
                                  (DOJ) U.S. Attorneys’ Offices (USAO), and DOJ’s Civil Division data.

                                  Notes: Data in this table are for calendar year 2010. For the subjects in the USAOs and DOJ’s Civil
                                  Division data, we identified the provider type using the court documents obtained from the Public
                                  Access to Court Electronic Records (PACER) database. The data from HHS-OIG pertained only to
                                  health care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP);
                                  however, data from the USAOs and DOJ’s Civil Division may have also included other health care
                                  fraud.
                                  a
                                   This category includes pharmacists, psychologists, therapists, counselors, physician assistants,
                                  dentists, recipients and beneficiaries, and others.


Civil Case Subjects in 2005 and   In 2010, over 600 more subjects were investigated in civil cases than in
2010                              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




                                  Page 27                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                              not be an accurate reflection of the actual increases in provider types of
                                              civil fraud cases.

Outcomes for Subjects of Civil                Not all of the subjects investigated in 2010 civil cases were pursued—
Fraud Cases in 2010                           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.)

Table 10: Number and Percentage of Subjects in Civil Health Care Fraud Cases, by Outcome of Case, 2010

                                                                                        Number of           Number of subjects                 Percentage of total
                                                                                         subjects                 by category                subjects by category
                                                                  a
Subjects in civil case investigations that were pursued
    Judgment for U.S. government or relator, or settlement, or both                                602
    Judgment for opposition (subject)                                                               11
    Case was declined                                                                               33
                                     b                                                                                            1,087                             46.5%
    Case was voluntarily dismissed                                                                 315
    Case was closed with necessary actions taken                                                    70
    Other outcome                                                                                   56
                                                                        c
Subjects in civil case investigations that were not pursued
    Lack of resources                                                                              271
    Lack of sufficient evidence or insufficient details                                             58
                                                                                                                                  1,246                                53.3
    Subject already under investigation or investigated in another case                             66
                    d
    Other reasons                                                                                  851
Subjects who appealed their original cases
    Appeal was dismissed by appellant                                                                 2
                                                                                                                                        6                                  0.3
    Appeal decision was favorable for the U.S.                                                        4
Total                                                                                           2,339
                                              Source: GAO analysis of data obtained from Department of Health and Human Services’ Office of Inspector General (HHS-OIG),
                                              Department of Justice’s (DOJ) U.S. Attorneys’ Office (USAO) and DOJ’s Civil Division data.

                                              Notes: Data in this table are for calendar year 2010. The data from HHS-OIG pertained only to health
                                              care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP); however,
                                              data from the USAOs and DOJ’s Civil Division may have also included other health care fraud.
                                              a
                                                Subjects in this section were involved in cases that were pursued, meaning that the USAOs or DOJ’s
                                              Civil Division received the case and took some sort of action on it. For example, in some cases,
                                              DOJ’s Civil Division received the case and declined to intervene while in others DOJ’s Civil Division
                                              litigated the case and the court issued a judgment against the subject.




                                              Page 28                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
b
 This category includes qui tam cases that were voluntarily dismissed by the relator as well as qui tam
cases that were voluntarily dismissed by the relator after the government decided not to intervene in
the case.
c
 Subjects in this section were from cases that were not pursued further than the case being received
or investigated by HHS-OIG. HHS-OIG did not refer these cases to the USAOs or DOJ’s Civil Division
for prosecution or litigation for the reasons included in this section.
d
 Other reasons include that the case does not meet established office guidance, the allegations in the
case do not constitute a violation, or the case is outside of U.S. prosecutorial guidelines. Some
subjects had their cases closed by HHS-OIG rather than referring the case to the USAOs or DOJ’s
Civil Division for prosecution or litigation for undetermined reasons.


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. 32

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.)




32
  Nearly 15 percent of subjects were involved in cases where the case had another
outcome, such as the case was transferred from the district or the court dismissed the
case on a motion. Additionally, 1.6 percent of subjects were involved in qui tam cases
where there was a judgment for the opposing party.




Page 29                                       GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 11: Number and Percentage of Subjects in Civil Health Care Fraud Cases with
Judgment for Government or Relator, or Settlement, or Both, by Provider Type,
2010

                                                                                                   Percentage of total
                                                                Number of subjects                 number of subjects
                                                                      with judgment                  with judgment or
                                                              or settlement, or both               settlement, or both
 Hospitals                                                                                165                           27.4%
 Medical facilities
       Medical practices                                                                    65
                                                                                                                          16.6
       Medical centers or clinics                                                           35
 Other centers, clinics, or facilities                                                      41                              6.8
 Home health agencies                                                                       34                              5.6
 Nursing homes                                                                              26                              4.3
 Durable medical equipment suppliers                                                        25                              4.2
 Management service providers                                                               21                              3.5
 Dental clinics or practices                                                                21                              3.5
 Pharmaceutical manufacturers or suppliers                                                  19                              3.2
 Insurance companies                                                                        15                              2.5
 Pharmacies                                                                                 13                              2.2
 Medical transportation companies                                                           11                              1.8
 Mental health centers, clinics, or facilities                                                5                             0.8
 Other                                                                                        5                             0.8
 Medical supply companies                                                                     3                             0.5
 Government employees, contractors, or grantees                                               2                             0.3
 Unknown affiliation
       Data unavailable                                                                     58
       Health care providers                                                                34                            15.9
       Individuals                                                                            4
 Total                                                                                    602
Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG), Department of Justice’s
(DOJ) U.S. Attorneys’ Offices (USAO), and DOJ’s Civil Division data.

Notes: Data in this table are for calendar year 2010. For the subjects in the USAOs and DOJ’s Civil
Division data, we identified the provider type using the court documents obtained from the Public
Access to Court Electronic Records (PACER) database. The data from HHS-OIG pertained only to
health care fraud in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP);
however, data from the USAOs and DOJ’s Civil Division may have also included other health care
fraud.




Page 30                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                            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. 33


Nearly 2,200 Individuals    HHS-OIG excluded individuals and entities from participating in federal
and Entities Were           health care programs for a variety of reasons in 2010. These reasons
Excluded from Program       included convictions for health care fraud as well as reasons other than
                            for health care fraud, such as patient abuse or neglect. 34 When
Participation by HHS-OIG,
                            individuals or entities are excluded, their provider enrollment is revoked
about 60 Percent of Whom    and they are not eligible to bill for services provided. 35 According to 2010
Were in the Nursing         exclusion data we received from HHS-OIG, 2,190 individuals and entities
Profession                  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.)




                            33
                              According to 2010 data from HHS-OIG, subjects of civil cases were to pay about
                            $633.4 million in fines and $1.474 billion in restitution. HHS-OIG also receives recoveries,
                            which is money returned administratively—such as through self-disclosure, demand
                            letters, or prepayment prior to disposition—rather than settlements or judgments.
                            34
                               As previously noted, HHS-OIG can exclude individuals and entities from program
                            participation for a variety of reasons other than for a health care fraud conviction, including
                            license suspension, surrender, or revocation. The exclusions data we received from HHS-
                            OIG contains all exclusions, not those exclusively related to health care fraud convictions.
                            35
                             Additionally, HHS-OIG has the authority to impose a civil monetary penalty on anyone
                            who employs an excluded individual or entity.




                            Page 31                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 12: Number of Individuals and Entities Excluded from Program Participation,
by Provider Type, 2010

 Provider type                                                                          Exclusions         Percentage
 Nursing profession with unknown affiliation                                                     1,281         58.5%
 Pharmacies                                                                                          150          6.8
 Health care provider with unknown affiliation                                                       125          5.7
 Mental health centers, clinics, or facilities                                                       100          4.6
 Medical centers, clinics, or facilities                                                              98          4.5
 Durable medical equipment suppliers                                                                  85          3.9
 Nursing homes                                                                                        75          3.4
 Home health agencies                                                                                 51          2.3
 Other                                                                                                43          2.0
 Other centers, clinics, or facilities                                                                42          1.9
 Medical practices                                                                                    39          1.8
 Medical transportation companies                                                                     34          1.6
 Dental clinics or practices                                                                          28          1.3
 Government employees, contractors, or grantees                                                       12          0.5
 Pharmaceutical manufacturers or suppliers                                                            9           0.4
 Hospitals                                                                                            8           0.4
 Management service providers                                                                         6           0.3
 Insurance companies                                                                                  3           0.1
 Unaffiliated individuals                                                                             1           0.0
 Total                                                                                           2,190
Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General data.

Notes: Data in this table are for calendar year 2010 and do not include cases also resulting in a civil
monetary penalty imposed by HHS-OIG.


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.)




Page 32                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                        Table 13: Number of Exclusions from Program Participation by Reason, 2010

                                                                                                              Number of
                         Exclusion reasons                                                                    exclusions               Percentage
                         License revocation/suspension/surrender                                                         909               41.5%
                         Program-related conviction                                                                      619                 28.3
                         Felony health care fraud conviction                                                             228                 10.4
                         Patient abuse/neglect conviction                                                                185                  8.4
                         Felony controlled substance conviction                                                          142                  6.5
                         Federal/state health care program                                                                 35                 1.6
                         exclusion/suspension
                         Entity owned/controlled by excluded/convicted                                                     32                 1.5
                         individual
                         Conviction relating to program or health care fraud                                               17                 0.8
                         Fraud/kickbacks                                                                                   10                 0.5
                         Individual controlling excluded/convicted entity                                                    5                0.2
                         Obstruction of an investigation conviction                                                          4                0.2
                         Failure to grant immediate access                                                                   2                0.1
                         Misdemeanor controlled substance conviction                                                         2                0.1
                         Total                                                                                         2,190
                        Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General (HHS-OIG) data.

                        Notes: Data in this table are for calendar year 2010 and do not include cases resulting in a civil
                        monetary penalty imposed by HHS-OIG.



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

Pharmaceutical
Manufacturers Were
Ordered to Pay the
Most in Civil Cases




                        Page 33                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
More Than 40 Percent of     Of the 2,742 subjects of health care fraud in Medicaid and CHIP referred
Subjects in Fraud Cases     to MFCUs for investigation, more than 40 percent were affiliated with two
Were Home Health Care       provider categories: home health care providers (26.6 percent) and health
                            care practitioners (14.8 percent). 36 Home health care providers and
Providers and Health Care
                            pharmaceutical manufacturers are the two provider categories that
Practitioners               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.)




                            36
                              Each instance of fraud in the data submitted by the 10 MFCUs represents one
                            individual, facility, or organization that is referred to as the subject of the fraud case. Fraud
                            case subjects may be an individual, such as a dentist or a nurse; an organization, such as
                            a pharmaceutical manufacturer; or a facility, such as a hospital. Several subjects may be
                            investigated in one fraud case; however, in the 10 states’ MFCU data submitted, each
                            subject in a fraud case is counted separately. Home health care providers include home
                            health agencies and home health care aides; and health care practitioners include
                            physicians, doctors of osteopathy, nurses, physician assistants, and nurse practitioners.




                            Page 34                                    GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 14: Number of Subjects of Health Care Fraud Referred to 10 Medicaid Fraud Control Units (MFCU) for Investigation, by
Provider Type, 2005 and 2010

                                                                          2005                                                                  2010
                                                 Total number of                                                        Total number of
                                              fraud subjects that                     Percentage of                  fraud subjects that                     Percentage of
                                                 were referred for                  total number of                    were referred for                   total number of
 Provider category                                  investigation                  subjects referred                       investigation                  subjects referred
 Home health care providers                                            357                          16.4 %                                   730                           26.6%
 Health care practitioners                                             487                             22.3                                  406                              14.8
 Other health care services                                            384                             17.6                                  384                              14.0
 Pharmaceutical manufacturers                                            71                              3.3                                 296                              10.8
 Durable medical equipment suppliers                                   143                               6.6                                 214                                7.8
 Dentists                                                              125                               5.7                                 184                                6.7
 Long-term care facilities                                             111                               5.1                                 157                                5.7
 Management service providers                                          211                               9.7                                 148                                5.4
 Pharmacies                                                            179                               8.2                                 120                                4.4
                                          a
 Hospitals and other medical facilities                                113                               5.2                                 103                                3.8
 Total                                                              2,181                                                                 2,742
                                              Source: GAO analysis of state MFCU data submitted by California, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Ohio,
                                              Texas, and Virginia, October and November 2011.

                                              Notes: Data in this table are for calendar years 2005 and 2010.
                                              Data in this table are for fraud in Medicaid and the Children’s Health Insurance Program (CHIP);
                                              however, the data may also include some health care fraud cases involving Medicare.
                                              Each instance of fraud in the data submitted by the 10 MFCUs represents one individual, facility, or
                                              organization that is referred to as the subject of a fraud case. Fraud subjects may be an individual,
                                              such as a dentist or a nurse, an organization such as a pharmaceutical manufacturer, or a facility
                                              such as a hospital. Several subjects may be investigated in one fraud case; however, in the MFCU
                                              data submitted each subject in a fraud case is counted separately.
                                              Data received from the state MFCUs included information 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.
                                              a
                                               In this table, hospitals and other medical facilities includes hospitals, radiology services, and
                                              substance abuse treatment centers.


                                              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.




                                              Page 35                                                     GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Home Health Providers    In 2010, 692 subjects were indicted or charged in criminal health care
Accounted for Nearly     fraud cases handled by 10 MFCUs; of those, nearly 40 percent were
40 percent of Criminal   home health care providers—which includes home health care agencies,
                         and home health care aides. Home health care providers also accounted
Convictions and About    for nearly 40 percent of criminal fraud convictions in 2010; health care
45 Percent of Subjects   practitioners—physicians, doctors of osteopathy, nurses, physician
Sentenced for 2010       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.)




                         Page 36                         GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 15: Outcomes for Subjects of Criminal Health Care Fraud Cases Handled by 10 Medicaid Fraud Control Units (MFCU),
by Provider Type, 2010

                                                                                                 Number of subjects
                                                                                                                                                                                a
Provider category                                Indicted/charged                  Convicted                Acquitted              Dismissed               Other results
Home health care providers                                          271                      192                          1                       6                             4
Health care practitioners                                             95                       76                         2                       9                             2
Other health care services                                            88                       73                         0                     16                              3
Management service providers                                          70                       67                         0                     22                              0
Durable medical equipment suppliers                                   89                       46                         3                     14                              2
Pharmacies                                                            27                       19                         0                       6                             0
Long-term care facilities                                               5                        7                        0                       3                             0
Dentists                                                              38                         5                        0                       4                             1
                                         b
Hospitals and other medical facilities                                  9                        3                        0                       2                             0
Pharmaceutical manufacturers                                            0                        0                        0                       2                             0
Total                                                               692                      488                          6                     84                            12
                                             Source: GAO analysis of state MFCU data submitted by California, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Ohio,
                                             Texas, and Virginia, October and November 2011.

                                             Notes: Data in this table are for calendar year 2010.
                                             Data in this table are for fraud in Medicaid and the Children’s Health Insurance Program (CHIP);
                                             however, the data may also include some health care fraud cases involving Medicare.
                                             Each instance of fraud in the data submitted by the 10 MFCUs represents one individual, facility, or
                                             organization that is referred to as the subject of a fraud case. Fraud subjects may be an individual,
                                             such as a dentist or a nurse, an organization such as a pharmaceutical manufacturer, or a facility
                                             such as a hospital. Several subjects may be investigated in one fraud case; however, in the MFCU
                                             data submitted each subject in a fraud case is counted separately.
                                             Data received from the state MFCUs included information 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.
                                             a
                                              This would include subjects whose cases resulted in diversions and other criminal case outcomes
                                             that were not included in the convicted column of this table.
                                             b
                                              In this table, hospitals and other medical facilities includes hospitals, radiology services, and
                                             substance abuse treatment centers.


                                             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


                                             Page 37                                                     GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                       case outcomes. 37 (See table 16 for additional information on criminal case
                                       outcomes.)

Table 16: Criminal Case Sentencing Outcomes for Subjects of Health Care Fraud Cases Handled by 10 Medicaid Fraud
Control Units (MFCU), by Provider Type, 2010

                                                             Number of                                                                                      Percent of
                                                              subjects                              Total amounts                                                 total
                           Number of   Number of             with other                               of monetary                                            monetary
                             subjects    subjects              criminal Total number     Percent of      penalties                                           penalties
                        sentenced to sentenced to                 case    of subjects total number      ordered to                                          ordered to
                                                                                                                 a
 Provider category      incarceration   probation            outcomes      sentenced     sentenced            pay                                                  pay
 Home health care
 providers                      107               135                   121                     363                44.5%              $7,471,691                     9.6%
 Health care
 practitioners                   41                 60                    23                    124                   15.2            16,741,992                      21.6
 Management
 service providers               45                 54                    17                    116                   14.2            10,067,803                      13.0
 Other health care
 services                        36                 50                    24                    110                   13.5            10,162,549                      13.1
 Durable medical
 equipment
 suppliers                       25                 20                      6                     51                    6.3           25,615,519                      33.0
 Pharmacies                       7                 13                    11                      31                    3.8             7,287,855                       9.4
 Long-term care
 facilities                       2                   5                     5                     12                    1.5                  22,034                   0.03
 Dentists                         2                   3                     1                       6                   0.7                  26,760                   0.03
 Hospitals and other
                    b
 medical facilities               0                   1                     2                       3                   0.4                265,308                      0.3
 Pharmaceutical
 manufacturers                    0                   0                     0                       0                   0.0                          0                  0.0
 Total                          265               341                   210                     816                                 $77,661,510
                                       Source: GAO analysis of state MFCU data submitted by California, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Ohio,
                                       Texas, and Virginia, October and November 2011.

                                       Notes: Data in this table are for calendar year 2010.
                                       Data in this table are for fraud in Medicaid and the Children’s Health Insurance Program (CHIP);
                                       however, the data may also include some health care fraud cases involving Medicare.
                                       Each instance of fraud in the data submitted by the 10 MFCUs represents one individual, facility, or
                                       organization that is referred to as the subject of a fraud case. Fraud subjects may be an individual
                                       such as a dentist or a nurse, an organization such as a pharmaceutical manufacturer, or a facility
                                       such as a hospital. Several subjects may be investigated in one fraud case; however, in the MFCU
                                       data submitted each subject in a fraud case is counted separately.



                                       37
                                        Other criminal case outcomes may include deferred sentences, limits on future
                                       employment, or limits on contact with certain individuals.




                                       Page 38                                                     GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                           Data received from the state MFCUs included information 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.
                           a
                            Monetary penalties include subjects being ordered to pay fines, restitution to the Medicaid program,
                           and investigative costs.
                           b
                            In this table, hospitals and other medical facilities includes hospitals, radiology services, and
                           substance abuse treatment centers.



Pharmaceutical             In 2010, cases handled by the 10 MFCUs involving pharmaceutical
Manufacturers Were         manufacturers resulted in the largest amount of civil judgments and
Ordered to Pay More Than   settlements, totaling $509.4 million and representing about 62 percent of
                           all judgments and settlements. According to the 2010 data, 360 subjects
60 Percent of the Civil    were ordered to pay nearly $829 million in civil judgments or settlements.
Judgments and              This represents an increase of 71 percent in the number of subjects
Settlements in 2010        compared to 2005 when 211 subjects were ordered to pay over
                           $808 million in civil judgments or settlements. In 2010, cases involving
                           home health care providers had the third-highest number of civil
                           judgments and settlements, and the second-lowest amounts of monetary
                           penalties; conversely, there were relatively few management service
                           provider subjects, yet those were the second-highest monetary penalty
                           amounts among the categories of providers. (See table 17 for additional
                           information on civil judgments and settlements by provider type.)




                           Page 39                                         GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Table 17: Civil Judgments or Settlements for Subjects of Health Care Fraud Cases Handled by 10 Medicaid Fraud Control
Units (MFCU) by Provider Type, 2005 and 2010

                                                                            2005                                                                  2010
                                                    Total number of                     Total amount                   Total number of                    Total amount
                                                  civil judgments or              defendants ordered                   civil judgments              defendants ordered
 Provider category                                        settlements                 to pay (dollars)                  or settlements                  to pay (dollars)
 Pharmaceutical manufacturers                                            26                  $360,464,411                                  111                 $509,372,944
 Other health care services                                              27                     20,653,844                                   54                    81,351,840
 Home health care providers                                              22                     15,977,759                                   43                      1,347,230
 Health care practitioners                                               23                       7,827,100                                  33                      5,688,174
 Management service providers                                            13                    258,291,795                                   27                  129,634,819
 Pharmacies                                                              27                     52,040,671                                   24                    48,985,438
                                          a
 Hospitals and other medical facilities                                  23                     87,481,318                                   21                    26,872,521
 Long-term care facilities                                               20                       1,115,974                                  18                        258,552
 Dentists                                                                13                       1,466,934                                  17                      9,263,750
 Durable medical equipment suppliers                                     17                       2,951,298                                  12                    15,798,274
 Total                                                                 211                   $808,271,103                                  360                 $828,573,542
                                              Source: GAO analysis of state MFCU data submitted by California, Florida, Illinois, Indiana, Louisiana, Massachusetts, New York, Ohio,
                                              Texas, and Virginia, October and November 2011.

                                              Notes: Data in this table are for calendar years 2005 and 2010.
                                              Data in this table are for fraud in Medicaid and the Children’s Health Insurance Program (CHIP);
                                              however, the data may also include some health care fraud cases involving Medicare.
                                              Each instance of fraud in the data submitted by the 10 MFCUs represents one individual, facility, or
                                              organization that is referred to as the subject of a fraud case. Fraud subjects may be an individual
                                              such as a dentist or a nurse, an organization such as a pharmaceutical manufacturer, or a facility
                                              such as a hospital. Several subjects may be investigated in one fraud case; however, in the MFCU
                                              data submitted each subject in a fraud case is counted separately.
                                              Data received from the state MFCUs included information 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.
                                              a
                                               In this table, hospitals and other medical facilities includes hospitals, radiology services, and
                                              substance abuse treatment centers.



                                              GAO provided a draft of the report to DOJ and HHS. DOJ provided
Agency Comments                               technical comments, which have been incorporated as appropriate. HHS
                                              did not comment on the draft.




                                              Page 40                                                     GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
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 Secretaries of Health
and Human Services and Justice, the Inspector General of HHS, and
other interested parties. In addition, the report will be available at no
charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made key contributions to this report are
listed in appendix III.




Kathleen M. King
Director, Health Care




Page 41                           GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Appendix I: Methodology for Analyzing Data
              Appendix I: Methodology for Analyzing Data
              Obtained from the Federal Agencies



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. 1 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



              1
               Although the Federal Bureau of Investigation (FBI) investigates health care fraud, and
              DOJ’s Criminal Division prosecutes health care fraud, we did not request data from them
              because officials told us that the FBI and DOJ’s Criminal Division primarily work on health
              care fraud cases jointly with the HHS-OIG or USAOs. Officials indicated that the vast
              majority of health care fraud cases handled by FBI and DOJ’s Criminal Division would be
              entered in databases used either by HHS-OIG or USAOs.




              Page 42                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Appendix I: Methodology for Analyzing Data
Obtained from the Federal Agencies




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). 2




2
 PACER is an electronic public access service that allows users to obtain case and docket
information from federal appellate, district, and bankruptcy courts via the Internet.




Page 43                                 GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Appendix I: Methodology for Analyzing Data
Obtained from the Federal Agencies




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.




Page 44                                 GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                        Appendix I: Methodology for Analyzing Data
                                        Obtained from the Federal Agencies




Table 18: Categories of Provider Types Developed for Analysis of Health Care Fraud Case Subjects

Entity                                  Types of providers included
Dental clinics or practices             Includes dentists, employees, and management who are employed by or operate dental
                                        clinics or practices; and entities that are dental clinics or practices.
Durable medical equipment suppliers     Includes employees and management—such as owners and operators—of durable
                                        medical equipment suppliers that provide medical equipment and supplies; and entities
                                        that are durable medical equipment suppliers themselves. This category includes many
                                        types of durable medical equipment such as diabetic supplies, hearing aids, home
                                        infusion, oxygen, and power vehicles.
Government employees, contractors, or   Includes employees, contractors, grantees, nurses, management, or state, local, or tribal
grantees                                agencies that are affiliated with a government agency. This category includes federal
                                        government employees, government grantees, and contractors who have received
                                        government contracts.
Health care providers with unknown      Includes physicians, physician assistants, nurses, health care aides, and employees
affiliation                             whose affiliation we could not determine. This category includes physicians who may
                                        specialize in a particular area of medicine, such as cardiology, though we do not know
                                        where the physician practices.
Home health agencies                    Includes employees, management, nurses, and health care aides who are employed by or
                                        operate home health agencies; and entities that are home health agencies themselves.
Hospitals                               Includes employees, management, nurses, physicians, and pharmacists who are
                                        employed by hospitals; and entities that are hospitals themselves. This category also
                                        includes state and local government hospitals.
Individuals with unknown affiliation    Includes individuals and employees that we could not determine if they were health care
                                        providers or whether they were affiliated with a medical setting such as a hospital or
                                        medical center.
Insurance companies                     Includes employees, management, nurses, and health care aides who are employed by or
                                        operate health insurance companies; and entities that are insurance companies
                                        themselves. This category includes private health insurance companies, health care
                                        conglomerates, health-maintenance organizations, and preferred provider organizations.
Management service providers            Includes employees and management who are employed by or operate companies that
                                        provide management services, such as billing, accounting, investing, or legal services;
                                        and entities that are companies that provide management services.
Medical centers or clinics              Includes employees, management, nurses, physicians, and health care aides who are
                                        employed by or operate medical centers, clinics, or facilities; and entities that are medical
                                        centers or clinics. This category includes clinics, such as intercare facilities, hospice
                                        clinics, and other clinics that specialize in a particular area of medicine.
Medical practices                       Includes employees, management, nurses, physicians, and health care aides who are
                                        employed by or operate medical practices or medical groups; and entities that are medical
                                        practices themselves. This category includes medical practices that specialize in a
                                        particular area of medicine, such as cardiology or dermatology.
Medical supply companies                Includes employees and management who are employed by or operate medical supply
                                        manufacturers or suppliers; and entities that are medical supply manufacturers or
                                        suppliers themselves.
Medical transportation companies        Includes employees and management who are employed by or operate medical
                                        transportation companies, such as ambulance companies; and entities that are medical
                                        transportation companies themselves.




                                        Page 45                                    GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                        Appendix I: Methodology for Analyzing Data
                                        Obtained from the Federal Agencies




Entity                                  Types of providers included
Mental health centers or clinics        Includes employees, management, and nurses who are employed by or operate mental
                                        health centers or clinics; and entities that are mental health centers or clinics themselves.
                                        This category includes community mental health centers, psychology practices, and
                                        counseling centers.
Nursing homes                           Includes employees, management, nurses, and health care aides who are employed by or
                                        operate nursing homes, such as skilled nursing facilities, adult homes, and boarding
                                        homes; and entities that are nursing homes themselves.
Other                                   Includes private citizens or individuals who were either not health care providers or whose
                                        affiliation was unknown.
Other centers, clinics, or facilities   Includes employees, management, nurses, and health care aides who are employed by or
                                        operate centers, clinics, and facilities, such as laboratories, physical therapy clinics, and
                                        optical practices; and entities themselves. This category includes centers, clinics, and
                                        facilities that are not otherwise specified in the other categories such as medical clinics,
                                        hospitals, nursing homes, or mental health centers or clinics.
Pharmaceutical manufacturers or         Includes employees and management who are employed by or operate pharmaceutical
suppliers                               manufacturing or supplying companies; and entities that are pharmaceutical
                                        manufacturers or suppliers themselves.
Pharmacies                              Includes employees, management, and pharmacists who are employed by or operate
                                        pharmacies; and entities that are pharmacies themselves.
                                        Source: GAO analysis of data obtained from the Department of Health and Human Services’ Office of Inspector General, U.S.
                                        Attorney’s Offices, and the Department of Justice’s Civil Division.



                                        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.




                                        Page 46                                                    GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Appendix II: Methodology for Selecting State
              Appendix II: Methodology for Selecting State
              Medicaid Fraud Control Units and Analyzing
              Submitted Data


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. 1 The 10 selected
              MFCUs accounted for 66 percent of MFCU grant expenditures. (See
              table 19 for additional information about the MFCUs.)




              1
               We did not receive complete CHIP fraud data from Florida, New York, and Texas
              because the MFCUs in these states do not investigate fraud in CHIP. In the other seven
              states, data on CHIP fraud were included.




              Page 47                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                            Appendix II: Methodology for Selecting State
                                            Medicaid Fraud Control Units and Analyzing
                                            Submitted Data




Table 19: Information about Health Care Fraud Handled by 10 State Medicaid Fraud Control Units (MFCU), Fiscal Year 2010

                                                        Fraud
                              Open fraud         indictments/                   Fraud             Civil settlements/                MFCU grant             Number of
                                                                                                                   a
States                     investigations             charges              convictions                   judgments                 expenditures            MFCU staff
California                           840                       113                     104                               52          $27,703,377                      185
Florida                              628                         73                      54                              73            15,629,601                     166
Illinois                             186                         15                      23                              18            10,063,030                       69
Indiana                              562                          7                      14                              34             4,250,731                       44
Louisiana                            276                         79                      40                              30             4,616,945                       51
Massachusetts                        278                         16                        4                             36             4,710,043                       40
New York                             588                         83                    102                             124             40,520,980                     306
Ohio                                 457                       105                       95                              42             5,346,883                       57
Texas                              1,262                       128                       80                              17            16,950,656                     183
Virginia                             246                         11                      11                              11             5,913,594                       70
10-state total                     5,323                       630                     527                             437         $135,705,840                     1,171
Total of all state MFCUs           9,710                    1,048                      839                           1,077         $205,500,671                  1,827.5
Percentage of national
total represented by
10 selected MFCUs                   54.8                      60.1                    62.8                            40.6                      66.0                 64.1
                                            Source: GAO analysis of the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) MFCU statistical data
                                            for fiscal year 2010.
                                            a
                                             Civil settlements and judgments data may include other cases in addition to health care fraud cases
                                            because the available HHS-OIG data includes both fraud cases and abuse and neglect cases.


                                            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. 2 (See table 20 for
                                            additional information about the definitions for the categories of provider
                                            types.)




                                            2
                                             MFCUs are required to submit data to the HHS-OIG quarterly regarding the number of
                                            investigations, open investigations by provider type, criminal and civil case results,
                                            administrative actions ordered, and monetary collections resulting from criminal and civil
                                            judgments or settlements.




                                            Page 48                                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
                                            Appendix II: Methodology for Selecting State
                                            Medicaid Fraud Control Units and Analyzing
                                            Submitted Data




Table 20: Categories of Provider Types Used in Data Collection Instrument Sent to State Medicaid Fraud Control Units for
Analysis of Health Care Fraud Case Subjects

Entity                                   Types of providers included
Management service providers             Includes managed care organizations, or other entities providing health care on an arranged,
                                         prepaid fixed amount; organizations or individuals providing Medicaid program administration
                                         support; billing companies that prepare and submit health care claims for payment on behalf
                                         of a health care provider or providers; and other program related services.
Dentists                                 Includes those licensed by the state to provide professional dentistry services to individuals,
                                         and partnerships or other formal organization of dentists.
Durable medical equipment suppliers      Includes persons or facilities that sell or lease disposable or nondisposable medical
                                         equipment or supplies.
Health care practitioners                Includes physicians and doctors of osteopathy licensed to provide medical care, regardless
                                         of specialty, partnerships or other formal physician organizations; and nurses, physician
                                         assistants, dental hygienists, and nurse practitioners, and other providers of health care
                                         services, not otherwise listed, who are regulated by the state in some manner through
                                         professional licensure or registration.
Home health care providers               Includes home health agencies and home health care aides—nonprofessionally licensed
                                         individuals providing homemaker, housekeeping, or personal services to individuals, that are
                                         reimbursed by federally-funded health care programs. May also include in-home care
                                         providers, personal care aides, and relative care givers.
Hospitals and other medical facilities   Includes hospitals; radiology—a person or organization (other than radiologists, who would
                                         be reported as physicians) who provides X-ray, MRI, or other radiology imaging services;
                                         and substance abuse treatment centers.
Nursing homes                            Includes all nursing facilities, licensed to provide skilled or intermediate care for individuals
                                         age 21 years or older, and other long-term care facilities such as those residential settings
                                         that provide nursing or personal care services for residents, regardless of age.
Other health care services               Includes podiatrists, optometrists and opticians, chiropractors, other practitioners, labs,
                                         mental health centers, clinics and facilities, including counselors and psychologists, and
                                         medical transportation providers.
Pharmaceutical manufacturers             Includes manufacturers of medicines/controlled substances that bill to federally funded
                                         health care programs.
Pharmacies                               Includes a person or organization operating a facility where medicine is compounded and
                                         dispensed, including pharmacists.
                                            Source: GAO analysis of Department of Health and Human Services’ Office of Inspector General documents.



                                            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.




                                            Page 49                                                  GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Appendix II: Methodology for Selecting State
Medicaid Fraud Control Units and Analyzing
Submitted Data




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. 3 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.




3
 Each instance of fraud in the data submitted by the 10 MFCUs represents one individual,
facility, or organization that is referred to as the subject of the fraud case. Fraud case
subjects may be an individual such as a dentist or a nurse, an organization such as a
pharmaceutical manufacturer, or a facility such as a hospital. Several subjects may be
investigated in one fraud case; however, in the 10 states’ MFCU data each subject in a
fraud case is counted separately.




Page 50                                   GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
Appendix III: GAO Contact and Staff
                  Appendix III: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Kathleen M. King, (202) 512-7114 or kingk@gao.gov
GAO Contact
                  In addition to the contact named above, key contributors to this report
Staff             were Martin T. Gahart, Assistant Director; Christie Enders; Jawaria Gilani;
Acknowledgments   Dan Lee; Drew Long; Dawn Nelson; and Monica Perez-Nelson.




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                  Page 51                               GAO-12-820 Fraud in Medicare, Medicaid, and CHIP
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