United States General Accounting Office
GAO Report to the Chairman, Subcommittee
on Human Resources and
Intergovernmental Relations, Committee
on Government Reform and Oversight,
House of Representatives
March 1997
MEDICAID FRAUD
AND ABUSE
Stronger Action
Needed to Remove
Excluded Providers
From Federal Health
Programs
GAO/HEHS-97-63
United States
GAO General Accounting Office
Washington, D.C. 20548
Health, Education, and
Human Services Division
B-275645
March 31, 1997
The Honorable Christopher Shays
Chairman, Subcommittee on Human Resources
and Intergovernmental Relations
Committee on Government Reform and Oversight
House of Representatives
Dear Mr. Chairman:
Medicaid, a joint federal-state health program for the poor, spent
approximately $160 billion in 1996 to provide health care coverage for
about 37 million people. Because of its size and complex structure,
Medicaid is vulnerable to fraud and abuse. State Medicaid agencies have
the primary responsibility to protect the program’s financial integrity and
to ensure that beneficiaries have access to quality care. This responsibility
includes ensuring that appropriate safeguards are in place to remove from
state programs those providers that commit fraud or abuse or those that
are incompetent. State Medicaid agencies must report providers they
remove from their programs to the Office of the Inspector General (OIG),
Department of Health and Human Services (HHS). The OIG is responsible
for determining whether the circumstances that resulted in states’
removing providers warrant promptly excluding them from federal health
care programs nationwide.
Exclusion should be a strong deterrent to unacceptable providers, but the
deterrent effect is diluted if they can continue to receive payment for
program services. Concerned that this situation could be occurring, you
asked us to examine how well the OIG’s exclusion process is working. On
September 5, 1996, we testified before the Subcommittee on the
preliminary results of our work,1 which suggested several weaknesses in
the OIG’s exclusion process. In some instances, these weaknesses have
resulted in unacceptable providers continuing to participate in federal
health care programs. The HHS Inspector General agreed with our findings
and testified that she was taking steps to strengthen the process.
In this report, we present the final results of our work, expanding on our
testimony concerning the weaknesses in the OIG’s process. In addition, we
ascertained what corrective actions the OIG has taken or plans to take and
further examined the problems states experience when using OIG
1
Fraud and Abuse: Providers Excluded From Medicaid Continue to Participate in Federal Health
Programs (GAO/T-HEHS-96-205, Sept. 5, 1996).
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B-275645
exclusion data. Moreover, we interviewed officials from the OIG and Health
Care Financing Administration (HCFA)—the agency that administers
Medicaid at the federal level—to determine their plans to improve health
care provider data systems, as required by the Health Insurance Portability
and Accountability Act of 1996.
In developing information for this report, we visited Illinois, Maryland,
Missouri, New York, Virginia, and Washington, D.C.2 To understand the
processes for removing providers from state Medicaid programs, we
worked with officials of state Medicaid agencies, Medicaid fraud control
units (MFCU), and state licensing boards. We also met with officials from
the four OIG field offices—Chicago, New York, Philadelphia, and
Washington, D.C.3—that oversee these six states and with officials from
OIG and HCFA headquarters. At selected state agencies, we reviewed case
files for a judgmentally selected sample of providers that the states
determined had abused the Medicaid program to ascertain the nature of
the providers’ wrongdoing and whether they had been referred to the OIG.
We followed up at the Chicago, New York, and Philadelphia OIG field
offices to determine whether they acted on the referrals and at Medicare
contractors to determine whether providers continued to participate in
Medicare after they had been excluded from Medicaid. Our scope and
methodology are discussed in more detail in appendix I.
Over the years, the OIG, working with state agencies, has excluded
Results in Brief thousands of providers from participating in federal health care programs
because of health care fraud, abuse, or quality-of-care problems, thus
helping to protect the financial integrity of those programs and decreasing
the likelihood that program beneficiaries receive substandard care.
However, several weaknesses in this exclusion process allow many
unacceptable providers to remain on the rolls of federal health programs.
The weaknesses we identified include (1) lack of controls at OIG field
offices to ensure that all state referrals received are reviewed and acted on
promptly, (2) inconsistencies among OIG field offices as to the criteria for
excluding providers, (3) lack of oversight to ensure that states make
appropriate exclusion referrals to the OIG, and (4) problems states
experience in attempting to identify and remove from their programs
providers that appear on the OIG’s exclusion list.
2
In this report, we refer to Washington, D.C., as a state.
3
In September 1996, the Washington field office became a suboffice of the Philadelphia field office.
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These weaknesses place the health and safety of beneficiaries at risk and
compromise the financial integrity of Medicaid, Medicare, and other
federal health programs. For example, OIG delays in acting on state
referrals allowed one physician to receive nearly $61,000 for services
provided to Medicare patients; these services were provided for more than
2 years after a state Medicaid program had removed him for maintaining
an unacceptable practice. Moreover, difficulties states experienced in
using OIG exclusion data allowed some providers to continue to be
enrolled in a state Medicaid program after they had been excluded
nationwide by the OIG. In one state, there were 13 instances in which this
occurred. One of the providers had been paid over $25,000 since being
excluded by the OIG.
OIG officials attributed many of these problems to repeated cutbacks in
resources occurring in the past several years. The Health Insurance
Portability and Accountability Act of 1996, however, addresses this
concern by providing the OIG with extra funding, specifically for dealing
with health care fraud. Some of this funding, officials said, will be used to
hire additional staff to process exclusion referrals. The act also includes
tools and resources to facilitate identifying unacceptable providers. These
tools include a system of unique billing numbers for health care
providers—to be developed to reduce the potential for inappropriate
payments—and an adverse action data bank—to be established to record
information on any adverse action taken against a health care provider.
When implemented, these tools should help to limit the number of
providers excluded from one program that continue to participate in
others.
In the interim, the HHS Inspector General has initiated actions to improve
the effectiveness of the exclusion process. For example, the OIG has
initiated a system to track all incoming exclusion referrals, staff have
received additional training to improve the consistency and quality of
exclusion processing, and outreach efforts are under way to help ensure
that states forward all required information. While these efforts are
significant, we believe further refinements are necessary to improve the
exclusion process.
The Secretary of HHS has delegated to the OIG the authority, under sections
Background 1128 and 1156 of the Social Security Act, to exclude certain health care
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B-275645
providers from most federal health care programs.4 Under the law, the OIG,
which acts through its Office of Investigations, must exclude, nationwide,
providers that have been convicted of a criminal offense related to
Medicare5 or any state health care program, a criminal offense related to
patient abuse or neglect, or a felony related to other health care fraud or
controlled substances. Under these circumstances, providers fall into the
category of “mandatory exclusions.”
The OIG also has authority to exclude individuals or organizations if the OIG
determines that the particular facts in a case meet certain criteria. These
actions are termed “permissive exclusions.” They may be based on, for
example, submitting excessive claims, license suspensions and
revocations, and sanctions imposed by federal or state health agencies.
(See app. II for the legal bases for exclusions.)
OIG field offices receive exclusion referrals from state Medicaid agencies,
licensing boards, MFCUs,6 and others. For mandatory exclusion cases, the
field offices assemble and forward to headquarters the case files
containing evidence of a provider’s criminal conviction. For other
referrals, which could result in permissive exclusions, the field offices
receive documents on disciplinary actions taken by state Medicaid
agencies, licensing boards, or others. The field offices assess the relevant
facts and forward to OIG headquarters the names of providers they
recommend for exclusion. OIG headquarters makes the final decision on
excluding the provider from program enrollment.
When the OIG excludes a provider, it sends notification letters to
organizations—such as state Medicaid agencies, Medicare contractors,
and state licensing boards—in the states in which the provider is known to
practice or operate. When applicable, the provider’s employer is also
notified. In addition, the OIG provides HCFA with periodic cumulative
4
OIG exclusions apply to Medicare (title XVIII of the Social Security Act) and state health care
programs, defined as Medicaid (title XIX), Maternal and Child Health Services Block grant (title V),
and Block Grants to States for Social Services (title XX). As a result of the Federal Acquisition
Streamlining Act of 1994, which mandates and expands the governmentwide effect of all debarments,
suspensions, and other exclusionary actions on federal procurement and nonprocurement programs,
OIG exclusions also apply to health care providers participating in the Federal Employees’ Health
Benefits Program (FEHBP), administered by the U.S. Office of Personnel Management, and the
Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), administered by the
Department of Defense.
5
Medicare is the federal program financing health care for the nation’s elderly and disabled.
6
Most states have MFCUs that must be organizationally independent of the agency that operates the
state Medicaid program. An MFCU is usually a component of the state attorney general’s office.
MFCUs investigate and prosecute provider fraud and cases relating to neglect or abuse of patients in
nursing homes and other facilities.
Page 4 GAO/HEHS-97-63 Medicaid Fraud and Abuse
B-275645
reports and monthly updates on excluded providers, which HCFA
distributes nationally.
As of October 1996, about 9,500 providers were excluded from federal
health care programs nationwide. Three exclusion categories—conviction
for program-related crime, conviction for a criminal offense related to
patient abuse or neglect, and license suspensions and
revocations—accounted for 76 percent of these nationwide exclusions.
Unless the OIG maintains accountability for state exclusion referrals,
OIG Process Does Not providers that have committed fraud or rendered substandard care to
Ensure Accountability Medicaid beneficiaries in one state can continue to provide services (1) to
and Timely Resolution Medicaid beneficiaries in other states, (2) under Medicare, or (3) through
other federal health programs. Likewise, long delays in processing
of All Exclusion exclusion referrals allow unacceptable providers to continue to provide
Referrals services in federal health care programs. In our review of a judgmental
sample of 88 state exclusion referrals to three OIG field offices, we found
that almost one-half of the referrals had significant processing problems.
Field offices had no record of 11 referrals. Processing time for another 30
referrals, or 34 percent, was 1 year or longer. All of the missing and
delayed referrals occurred among the 66 referrals we followed up on in the
Chicago and New York field offices. In these offices, long delays occurred
for both mandatory referrals—which the OIG is required by law to
exclude—and permissive referrals—for which the OIG has to decide
whether certain exclusion criteria are met. While these referrals remained
unresolved, some providers received thousands of dollars from Medicare.
Accountability Lacking for OIG field offices could not account for all referrals received from state
Referrals agencies. While the Philadelphia field office had files for all 22 referrals we
reviewed, the Chicago and New York field offices had no records for 11 of
the 66 state referrals we checked.
The Chicago field office could not locate 5 of 18 referrals from the Illinois
Medicaid program and 1 of 14 referrals from the Illinois MFCU. Moreover,
three of the state Medicaid agency referrals involved serious
quality-of-care issues. For example, in April 1995, the Illinois Medicaid
agency excluded a dentist from its program for providing care that placed
his patients at risk. Among the charges was that the dentist had performed
surgical extractions and had given patients general anesthesia without
documented need. The state Medicaid agency’s case file on this dentist
Page 5 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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showed that he had been referred to the OIG in June 1995. When we
inquired at the Chicago field office in March 1996, however, no record
could be found of the case. After our inquiry, the office opened a case file
on the dentist and he was excluded by the OIG in December 1996. During
the 17-month period between state removal from Medicaid and OIG
exclusion from all federal health care programs, this dentist received over
$13,000 for services provided to Medicare patients.
Likewise, the New York field office had no record for 5 of the 28 referrals
we reviewed that the New York Medicaid officials claimed had been
referred to the OIG. Specifically, the field office had no record of a
physician who had been excluded from the state’s Medicaid program over
a year earlier for a variety of quality-of-care problems, such as failure to
evaluate patient problems and overutilization of laboratory and other
tests. From the time this physician was removed from Medicaid in New
York, Medicare had paid him over $108,000, as of November 1996. In
another case, the field office had no record of a durable medical
equipment supplier who had been removed from Medicaid 2 years earlier,
after an audit determined that the supplier had overbilled the Medicaid
program by more than $173,000.
Delays in Processing OIG processing of state referrals was sometimes delayed while the Chicago
Exclusion Referrals and New York field offices waited for states to send in documents needed
by the OIG to exclude the provider nationwide. In mandatory exclusion
cases, the OIG requires copies of conviction and sentencing documents; in
permissive cases, the OIG requires basic information describing what the
provider did to bring about the state removal. The extent to which states
furnished such documentation when referring a case to the OIG varied
among state agencies we contacted. This variation seemed due, in part, to
an absence of clear guidance from the OIG on the documentation needed
for exclusion processing. Moreover, when these documents were not
provided with the referral, case files often did not show any indication of
field office follow-up to obtain the missing information. Even after all the
information was received, some case files showed long periods of
inactivity. OIG guidance requires that after field office staff receive a
permissive exclusion referral, they must decide, within 60 working days,
whether to pursue exclusion. However, the guidance does not set any
standards or performance goals for actually processing state referrals after
the decision is made to pursue an exclusion.
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In contrast to the Chicago and New York field offices, the Philadelphia
field office resolved all of the 22 referrals we reviewed in less than 1 year
and most took 6 months or less. This situation appeared to be due, in part,
to the Maryland MFCU—the state agency whose referrals we selected for
follow-up in the Philadelphia field office—consistently sending the field
office all the required documentation.
The following examples illustrate the delays we found in Chicago and New
York (additional examples can be found in app. III):
• A pharmacy was removed for overbilling the Illinois Medicaid program by
more than $117,000. The Chicago field office took 15 months to forward
this permissive exclusion case to headquarters. The case file showed no
activity for extended periods of time, including a 10-month period.
• In a mandatory exclusion case, the Chicago field office referred a provider
to headquarters for exclusion 19 months after the Illinois MFCU notified it
that the provider had pled guilty and was sentenced in state court for
falsely billing for Medicaid services. Two-and-one-half months after the
case was forwarded to OIG headquarters, the provider was excluded
nationwide.
• In another mandatory exclusion case, a dentist was sentenced in June 1995
for stealing more than $220,000 from New York’s Medicaid program,
charging for more expensive procedures when less expensive ones were
actually performed or charging for services not provided. State delays in
providing documents on the sentencing initially delayed the New York
field office’s processing of the case. These documents were received in
November 1995, but no further action had been taken on the case until a
few days before we reviewed it in November 1996.
• The Medicare program in New York paid a physician nearly $61,000 during
the more than 2-year period from the time the state Medicaid agency in
New York notified the OIG field office that it had removed a physician to
the time the OIG excluded the physician from all federal health programs.
The state had removed the physician from Medicaid for maintaining an
unacceptable practice, keeping inadequate records, and for
inappropriately sharing fees for professional services. We reviewed the
New York field office case file on this permissive exclusion, and it showed
inactivity for extended periods of time, including one 17-month period.
• In a similar permissive exclusion case, OIG headquarters decided not to
pursue exclusion against a physician, who had been removed from New
York’s Medicaid program for providing poor quality of care to Medicaid
beneficiaries, because it considered the case too old to pursue. The field
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office had received the referral 18 months earlier. Since exclusion from
Medicaid, Medicare in New York had paid this physician over $86,000.
We identified inconsistencies in the way the OIG has handled permissive
Processing of exclusions, that is, cases in which the OIG has discretion on whether to
Permissive Exclusions recommend nationwide exclusion. In 1987, the OIG was given expanded
Inconsistent Among discretionary authority to exclude providers nationwide.7 The OIG,
however, has not always used its expanded exclusion authority
Field Offices consistently. Given competing demands on the OIG’s time, permissive
exclusions have sometimes had a relatively low priority, OIG officials said.
In October 1992, the OIG instructed its field offices to process state
Medicaid agency and licensing board disciplinary actions only when actual
harm was done to patients and the provider had moved to another state.
Field offices, in turn, asked state agencies to refer only these kinds of
cases. About a year later, however, the OIG rescinded this guidance and
state agencies were asked once again to refer all cases.
We also observed inconsistencies in the way field offices process
permissive exclusion cases. As a result, providers with equally serious
problems could be treated differently by the OIG, depending on location.
For example, the Washington, D.C., field office would not consider
recommending nationwide exclusion unless a state Medicaid agency had
excluded the provider or a licensing board had revoked a license for at
least 1 year, a field office official said. The Chicago and New York field
offices, however, use a 2-year rule of thumb. Moreover, cases that
appeared to be equally serious received different treatment in the same
field office. For example, the New York field office forwarded to OIG
headquarters a physician’s case for nationwide exclusion after the state
Medicaid agency removed the physician. The reasons for removal were
providing excessive services, treating patients inappropriately with the
wrong medications, and not performing sufficient testing to determine the
cause of patients’ complaints. This field office, however, did not forward
the case of another physician, whom the state had removed for similar
reasons about a year earlier. The field office case file lacked an
explanation or rationale for why this case had not been investigated. The
regional inspector general, the head of the field office, said the office’s
large backlog of cases and shortage of staff accounted for the situation.
7
Medicare and Medicaid Patient and Program Protection Act of 1987 (P.L. 100-93).
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B-275645
Section 1902 of the Social Security Act requires state Medicaid agencies to
OIG Oversight of State report to HHS whenever a provider of services is terminated, suspended, or
Agencies Could Be otherwise sanctioned or prohibited from participating in the program.8 For
Improved purposes of indicating which providers the OIG may exclude, HHS
regulations define the term “otherwise sanctioned” as intending to cover
all actions that limit the ability of a person to participate in the program,
regardless of what such an action is called, including situations in which
an individual or entity voluntarily withdraws from a program to avoid a
formal sanction (42 C.F.R. 1001.601).
We found, however, that states were not always clear about reporting
requirements and OIG field offices did not monitor state agencies to ensure
that all cases that fell under the OIG’s exclusion authority were being
referred. Consequently, the OIG was not informed of all providers that had
committed fraud or abuse or had furnished poor quality of care in a state
Medicaid program; such providers could therefore continue providing
services to beneficiaries under Medicare or other state Medicaid programs.
Some State Medicaid During our state visits, we found that four state Medicaid agencies did not
Agencies Not Reporting to always report removals. Two states—Illinois and New York—did not
the OIG notify the OIG of certain providers effectively removed from their
programs; Missouri did not report removals to the appropriate OIG field
office. Further, the Medicaid agency in Washington, D.C., did not report
any removals to the OIG because officials were unaware of the reporting
requirements.
In Illinois, the state Medicaid program sometimes negotiates a settlement
agreement with a provider against whom it has initiated removal
proceedings because of, for example, serious quality-of-care problems.
The settlement, in effect, excludes the provider, but the state does not
spend the time and resources needed to pursue a formal action. In such an
agreement, the provider admits no wrongdoing, but agrees to withdraw
from participation in Medicaid. The provider also forfeits the right to
appeal if denied reinstatement at a later date. The provider does not,
however, face the prospect of losing the license to practice because,
according to state Medicaid officials, the case is not referred to the state
licensing board. In addition, the state does not report such a case to the
OIG. This settlement enables Illinois to remove providers from its Medicaid
program relatively quickly and keep them out. But, because the state does
8
Section 1902 of the act also requires MFCUs to operate in accordance with standards established by
the Secretary of HHS. One of these standards requires MFCUs to report convictions to the OIG.
Page 9 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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not refer these actions to the state licensing board or the OIG, the providers
may continue to provide services like those for which the state sought the
provider’s removal from Medicaid.
As of June 1996, about 23 percent of the physicians not allowed to
participate in the Illinois Medicaid program had withdrawn rather than
face an adverse action. When we checked on the Medicare status of four
providers who had withdrawn from Medicaid between 1992 and 1995, we
found that all four were still enrolled in Medicare and three continued to
bill for services. These providers had withdrawn from Medicaid for serious
quality-of-care problems. For example, Medicare paid a podiatrist over
$32,000 for services provided to program beneficiaries after he had
withdrawn from the Illinois Medicaid program in August 1995. The
podiatrist withdrew from the program after the state alleged that he had
provided grossly inferior care to Medicaid beneficiaries. Another provider,
a physician, withdrew in April 1995, after the state charged him with
providing poor care to Medicaid beneficiaries. The following were among
the allegations made by the state: diagnoses were inconsistent with
medical findings, abnormal laboratory test results were not addressed, and
medications were used without clinical indications. Since this physician’s
withdrawal from Medicaid, Medicare has paid him over $7,000.
In commenting on this report, Illinois said that federal requirements for
state reporting of negotiated settlements were unclear. Specifically, the
state questioned whether a direct link existed between the statute—which
requires state Medicaid agencies to report providers who are “otherwise
sanctioned”—and the federal regulation—which defines the term to
explain the circumstances under which the OIG may impose a permissive
exclusion. Although the regulation may be somewhat unclear, the OIG
interprets it as requiring states to report providers who voluntarily
withdraw from the Medicaid program.
We do not know how many states, other than Illinois, allow providers to
avoid adverse action by withdrawing from Medicaid. In four other states
we visited—Maryland, Missouri, Virginia, and Washington, D.C.—such
withdrawals seldom occurred or were not allowed. In the remaining state,
New York, providers are sometimes allowed to withdraw from its
program, but state Medicaid officials said these cases are reported to the
OIG, the state licensing board, and others. New York, however, removes
certain providers it suspects of abuse, but does not report the cases to the
OIG. New York program regulations permit either the provider or the state
Medicaid agency to end the provider’s participation in the program
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“without cause,” with 30 days’ written notice. This practice has been used
primarily against pharmacies that the state suspected were heavily
involved in dispensing prescription drugs easily diverted to illicit use. As a
result, the state agency has been able to deal quickly with pharmacies that
it believed were involved in drug diversion.
In the course of our work, we identified two other problems in state
reporting to the OIG. In Missouri, for over 1 year, referrals from the
Missouri Medicaid program did not reach the OIG’s Chicago field office
because of some confusion associated with the closure of the OIG’s Kansas
City field office and a realignment of responsibilities.9 One of the referrals
that was not promptly considered involved a pediatric dentist who had
been removed from the Missouri Medicaid program in May 1995, after the
state licensing board had revoked his license. Among the numerous
charges of poor quality of care against this dentist was that while
attempting to administer a local anesthetic, he penetrated the nasal cavity
of one child and pierced the jaw of another. He was also charged with
being abusive to a patient by striking her and, in another case, failing to
consult with a child’s parent before extracting four front teeth. A program
analyst in the Chicago field office told us he first became aware of, and
started working on, this case in March 1996, after receiving information on
the dentist’s license revocation from the state dental board. The dentist
was excluded nationwide by the OIG in August 1996—approximately 15
months after he had been excluded from the Medicaid program in
Missouri.
Finally, in Washington, D.C., Medicaid officials told us they did not report
disciplinary actions to the OIG, and the official with overall responsibility
for provider enrollment and removal did not know of the requirement to
do so. Records in Washington’s Medicaid agency indicated that as of
August 1996, 36 providers had been removed from its program for
disciplinary reasons. In one case, the Medicaid agency had removed a
provider in April 1994 for poor quality of care and patient abuse.
9
In April 1996, Missouri Medicaid officials told us that they reported providers they had removed from
their program to the OIG’s Kansas City investigations field office. According to OIG officials, however,
this office had been closed about a year earlier and the state should have been reporting cases to the
Chicago field office. Missouri officials said that the information sent to the Kansas City field office was
never returned, so they had no way of knowing it was not being received. Chicago OIG officials were
unaware that they were not receiving cases from the state Medicaid agency until we brought this to
their attention.
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State MFCUs May Not In May 1996, the OIG began an effort, known as Project WEED, designed, in
Have Reported All part, to determine if state MFCUs were reporting all mandatory exclusion
Convictions cases. The project identified over 400 convictions resulting from MFCU
investigations that, the OIG contended, had not been reported to its field
offices. Although some of these cases may not have been reported to the
OIG, the OIG may have been unaware of others because field offices lacked
accountability over cases, as discussed earlier. One MFCU representative
we contacted acknowledged his unit had not been reporting cases.
However, a representative from another unit, which accounted for nearly
one-third of the Project WEED cases, told us the cases had been reported
to the appropriate field office.
We believe that the OIG needs to provide clearer guidance to states on its
reporting requirements. We also believe improved oversight by OIG field
offices of key state agencies that refer cases to the OIG, such as MFCUs and
state Medicaid agencies, would at least identify those agencies that are not
reporting. Improved oversight would also allow the OIG to be better
informed about the extent of states’ compliance with statutory reporting
requirements for removed providers.
The OIG and HCFA periodically provide state Medicaid agencies with lists of
States Sometimes providers that have been excluded from federal health care programs.
Have Difficulty States are expected to use these exclusion data to ensure that
Identifying OIG-excluded providers are removed from their Medicaid programs, if
currently enrolled, or prevented from enrolling at a later date. Limitations
OIG-Excluded in OIG’s exclusion data and inconsistencies between OIG and state tracking
Providers systems, however, can make it difficult for states to identify excluded
providers. As a result, providers that have been excluded nationwide by
the OIG sometimes continue to be enrolled in state Medicaid programs. The
Health Insurance Portability and Accountability Act of 1996 contains
provisions that could make the identification and tracking of excluded
providers easier and more reliable, but these improvements are most likely
years away from implementation.
Exclusion Data Distributed About twice a year, the OIG prepares a Cumulative Sanction Report, which
to State Medicaid Agencies is an alphabetical list of all individuals and organizations that have been
excluded nationwide from federal health programs. For each name listed,
the report shows date of birth and Social Security number (for
individuals), health care specialty or type of business, and address. Also
shown is the authority used to impose the exclusion and the date the
Page 12 GAO/HEHS-97-63 Medicaid Fraud and Abuse
B-275645
exclusion took effect. The OIG provides a copy of the report, on a diskette,
to HCFA. HCFA’s Issuances Unit prepares a paper copy of the report, which
is then forwarded to a contractor for printing and distribution to state
Medicaid agencies. The HCFA-prepared report does not identify individuals
or organizations by Social Security or employer identification number.10
We were informed, however, that state Medicaid agencies could obtain a
copy of the complete report, on a diskette, from the OIG. The OIG also
provides HCFA with monthly exclusion updates on diskette, which HCFA
sends to state Medicaid agencies in paper copy and via electronic mail. In
contrast to the cumulative report, both the paper copy and, until recently,
electronic versions of the monthly updates have included the Social
Security numbers of individuals who were excluded since the previous
monthly update.
Identifying Excluded In the six states we visited, Medicaid officials responsible for ensuring that
Providers Is OIG-excluded providers were not enrolled in their programs were generally
Time-Consuming and unaware of the availability of cumulative exclusion data on diskette, as
well as monthly updates on electronic mail. Thus, to check on providers,
Cumbersome Medicaid officials typically relied on paper copies of the cumulative
exclusion list and monthly updates. Manually comparing the thousands of
names on the OIG cumulative list and the dozens of names on the monthly
updates with their enrollment files is difficult, if not impractical. Moreover,
the paper copy of the cumulative exclusion list received by state Medicaid
agencies lacks identifiers, such as Social Security numbers or employer
identification numbers, which could facilitate checking. Although the OIG’s
diskette of the cumulative exclusion list does not contain employer
identification numbers for organizations, it does have Social Security
numbers for individuals. Thus, states, if made aware that the diskette is
available, could use it to cross-check with their provider enrollment files,
to the extent state files contain Social Security numbers.
When we cross-checked the automated version of OIG’s February 1996
Cumulative Sanction Report against the state Medicaid agency enrolled
provider files, we found excluded providers enrolled in five state Medicaid
programs. For example, we found 13 out-of-state providers who had been
excluded by the OIG between 1988 and 1995, but were still enrolled in the
Illinois Medicaid program. Similarly, we found 10 OIG-excluded providers
enrolled in the Washington, D.C., Medicaid program, two each enrolled in
Maryland and Missouri, and one enrolled in Virginia. One of the Illinois
10
Since 1996, the cumulative exclusion list and the monthly update have been available on the Internet,
but also lack identifiers.
Page 13 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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providers had received almost $25,000, while one of the Missouri providers
had received over $9,000. Although none of the other providers had billed
their state Medicaid programs after being excluded by the OIG, state
Medicaid officials acknowledged that these providers would have been
paid had they submitted claims.11
The states we visited tended to use the paper version of the OIG’s monthly
list for a one-time cross-check against their active provider files. However,
most states did not review earlier monthly lists to cross-check for an
excluded provider who tried to enroll in the state’s Medicaid program in
any month after exclusion. Thus, a provider could enroll in a state’s
Medicaid program, after being excluded nationwide by the OIG, and not be
detected. Likewise, some states we visited did not always cross-check
providers that appeared on the monthly update but had out-of-state
addresses. This can lead to problems because many providers can provide
services in more than one state or can relocate, gaining access to
Medicaid. An official in Missouri, for example, told us that although staff
did cross-check the OIG monthly list against in-state and border state
addresses, they did not check names from other states. New York officials
also told us they only cross-checked names with addresses in their state
because too much time would be required to cross-check the entire list. In
our cross-checking, we found that almost all of the OIG-excluded providers
enrolled in state Medicaid programs were listed with out-of-state
addresses on the OIG’s excluded provider list.
HCFA officials have recently updated a software program that would enable
them to compress cumulative exclusion data and transmit the data to the
states on the Internet. This report—unlike the cumulative report already
available on the Internet and available to the public—would include Social
Security numbers for individual providers. However, because of concerns
about maintaining confidentiality for Social Security numbers transmitted
over the Internet, HCFA decided not to electronically transmit to the states
the cumulative report with Social Security numbers and stopped including
Social Security numbers on the monthly updates. Thus, the OIG’s
cumulative and monthly diskettes are currently the only automated means
to obtain excluded providers’ Social Security numbers.
11
The OIG has found similar problems in Medicare in Maryland. In Medicare Payments to Excluded and
Unlicensed Health Care Providers, Office of Inspector General, Report No. A-14-96-00202 (Nov. 1996),
the OIG reported that Medicare reimbursed six Maryland providers after they were excluded by the
OIG and six other providers after their licenses were suspended or revoked by the state licensing
board.
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After we gave several state officials an OIG diskette of excluded providers,
including Social Security numbers, they told us that if they could have
these data routinely, they would explore the feasibility of cross-checking
the data against their enrollment files. For example, one state official told
us that once he received automated listings of excluded providers, he
intended to do periodic computer matches of OIG exclusion data and state
provider files. Such matching, however, would still require extensive
manual analysis of the results, he said, because OIG’s format cannot readily
be made compatible with the state’s own files. Moreover, such
computer-matching would not prevent a provider from enrolling in the
program between matches. Much better, he said, would be for the state to
integrate the exclusion data into its enrollment file; this integration would
automatically ensure that OIG-excluded providers would be removed from
the state’s Medicaid program and that OIG-excluded providers not currently
enrolled could not enroll later. Consequently, he said, he had requested
that the Medicaid agency’s information system staff explore the feasibility
of setting up a system for capturing OIG exclusion data. Information system
resources are currently focused on the state’s implementation of managed
care and other priorities, however, he said, so this project most likely will
not receive attention for a long time.
Lack of Common No universal identifier for health care providers currently exists, and
Identifiers Hampers health care providers often have multiple identifiers for the programs and
Detection organizations with which they do business. This makes it difficult to
identify and track excluded providers across health care programs. State
Medicaid agencies, for instance, sometimes have difficulty determining
whether OIG-excluded providers are enrolled or have attempted to enroll in
their programs because identifying information about the providers on the
exclusion list may be incomplete or different from the identifiers used in
state data systems.
Although OIG exclusion data usually include Social Security numbers for
excluded individuals, the data do not include identifiers for certain
excluded organizations, such as pharmacies, home health care agencies,
and medical transportation companies. Almost 800 excluded organizations
were listed on the OIG’s October 1996 cumulative report. Without an
identifier, such as an employer identification number, it is difficult for a
state Medicaid agency to determine whether a provider enrolled in its
program is the same organization as one on the excluded provider list with
the same or a similar name. Although OIG exclusion data usually include
the addresses of excluded organizations, they frequently relocate or
Page 15 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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operate out of multiple locations. But including employer identification
numbers on the OIG exclusion list would not necessarily solve the problem
because organizations can use different numbers.
The lack of common identifiers also hampers tracking providers in states
that use identifiers other than Social Security numbers. Missouri and
Virginia, for example, give individuals the option of enrolling by Social
Security number or employer identification number. To the extent
individuals in these states use employer identification numbers, excluded
providers are unlikely to be detected through computer-matching of Social
Security numbers. Alternatively, these states could attempt to match by
name, but name-matching can result in many erroneous identifications, as
well as the need for time-consuming research and follow-up. In some
states, however, individual providers are identified solely or primarily by
Social Security numbers, making it relatively easy to cross-check the OIG
exclusion data with state enrollment files.
In addition, certain kinds of excluded providers that do not directly bill a
state Medicaid program—such as nurses, pharmacists, or physicians
employed by hospitals, nursing homes, pharmacies, and health
maintenance organizations—are difficult to identify. These providers, once
excluded, can change employers or move to other states and continue to
provide services through federal health care programs without detection.
To at least partly deal with this problem, OIG exclusion data will be added
to the National Practitioner Data Bank—a repository of information on
practitioners (physicians, dentists, and other state-licensed health care
providers) concerning malpractice payments; clinical privilege actions;
and adverse actions taken by hospitals, insurance companies, licensing
boards, and professional societies. The OIG believes that this action will
substantially reduce the number of excluded licensed providers that
continue to indirectly participate in federal health care programs in
hospitals. This is because hospitals, when making appointments to their
medical staff or granting clinical privileges, are required to query the
database for all new practitioners and all current practitioners every 2
years. But not all excluded providers would be exposed by these queries.
For one thing, not all providers are covered by the database because some
are not state licensed. For example, Maryland does not license nurses’
aides. Moreover, some providers may not be affiliated with hospitals.
Other organizations—such as nursing homes, pharmacies, and health
maintenance organizations—are allowed, but not required, to query the
database.
Page 16 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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New Legislation May Make The Health Insurance Portability and Accountability Act of 1996, enacted
Identifying Excluded in August 1996, has added tools that may help the OIG and states track
Providers Easier and More unacceptable providers. One of these tools is a system of unique health
identifiers for all health care providers, which the act requires HHS to
Reliable establish. Assigning a unique identifier to each health care provider should
make it easier for state Medicaid agencies to determine if excluded
providers are enrolled in their programs, reducing opportunities for
excluded providers to receive inappropriate payment. However, full
implementation will take several years.
The act requires that within 18 months, the Secretary of HHS adopt a
standard for a unique health identifier for all health care providers—both
individuals and organizations. Since 1993, HCFA has been developing a
unique identifier for Medicare providers, known as the National Provider
Identifier (NPI). HCFA plans to adapt the NPI to meet the requirements of the
act and has begun working to encourage states, private payers, and other
federal agencies to adopt the NPI. A proposed regulation announcing the
standard and seeking public comment is expected to be published in
spring 1997, with a final regulation planned for July 1997.
Although the law requires compliance with the standard within 24 months
after it is adopted, according to HCFA officials we spoke with, it will most
likely take much longer to assign NPIs to all health care providers. The law
primarily deals with those providers who bill federal programs
electronically, HCFA officials believe. Thus, HCFA will emphasize assigning
identification numbers to these providers, reserving for later assigning
numbers to other providers, including the estimated thousands who do not
participate in federal programs at all. Implementing the provisions for a
unique identifier may also be delayed because of unresolved questions on
how to (1) meet the cost of implementing the new system, (2) ensure that
all health care providers are identified and assigned NPIs, and (3) minimize
the disruption to health plans and organizations when converting their
provider enrollment files.
Another tool provided for by the act—which may help the OIG, state
Medicaid agencies, and other health care programs keep track of problem
providers—is the Adverse Action Data Bank. Currently, no centralized
database exists to track fraud and abuse in the health care system. The
OIG’s excluded provider list is but one of several databases and information
sources that contain information on problem health care providers. The
Adverse Action Data Bank would provide a comprehensive and centralized
database of “final adverse actions,” such as criminal convictions, civil
Page 17 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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judgements, exclusions from federal health care programs, administrative
sanctions, and other disciplinary actions imposed against health care
providers. This database is to be widely accessible to public and private
health care organizations.
Like assigning unique identifiers, setting up the database will take time to
accomplish. The OIG, in conjunction with the Department of Justice, is
responsible for overseeing the development of the database, but OIG
officials we spoke with estimated implementation was at least a year
away. Although start-up costs could be about $2 million, the costs to
operate the database are largely unknown. Moreover, certain factors could
limit the data bank’s effectiveness. For instance, the law does not contain
sanctions or penalties if a government agency or health plan fails to report
its adverse actions or use the database. Thus, some way must be found to
(1) persuade these entities to report their adverse actions and (2) convince
them, especially state agencies and health plans that will be charged for
inquiries, that the database is useful. In addition, the law specifies that the
database must not duplicate information already contained in the National
Practitioner Data Bank. Moreover, the law exempts from reporting those
settlements in which no findings of liability have been made, such as the
provider withdrawals we found occurring in the Illinois Medicaid program.
HCFA and OIG officials fear that if large numbers of providers attempt to
enter into settlements to avoid being listed in the database, these
exemptions could undermine the usefulness of the database.
OIG officials attributed many of the problems we found to resource cuts
The OIG Is Taking over the last several years. For the audit and investigation of health care
Actions to Strengthen providers, the Health Insurance Portability and Accountability Act
the Excluded Provider appropriates for the OIG not less than $60 million and not more than
$70 million in extra funds for fiscal year 1997, with additional amounts
Process authorized for subsequent years. Headquarters officials plan to use some
of this money to hire additional field office staff to process exclusion
cases, they said. In addition, under the Project WEED umbrella, the OIG has
taken or planned other corrective actions:
• Tracking of incoming exclusion referrals: Since September 1996, the OIG
field offices have maintained a database on all exclusion referrals from
states. According to a headquarters official, as of December 1, 1996, more
than 4,300 exclusion referrals had been logged in.
• Training of field office staff: In July and September 1996, field office staff
who process exclusion referrals from states received training. It focused
Page 18 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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on what staff need to do to prepare a case for exclusion and reemphasized
the criteria and guidance staff are expected to follow, headquarters
officials said.
• Outreach efforts: The OIG plans to contact state Medicaid agencies, MFCUs,
and licensing boards to ensure that all information needed to process
provider exclusions is forwarded to field offices. Letters will be sent to
these organizations, describing the specific documentation the OIG needs
to process a case for exclusion.
When providers defraud federal or state health care programs or give poor
Conclusions quality care, the OIG has authority to exclude them nationwide from
participation in these programs. The process for excluding providers can
and has operated successfully, with thousands of unacceptable providers
excluded from Medicare, Medicaid, and other federal health care programs
over the years.
However, we found cases in which unacceptable providers in one state’s
Medicaid program can be enrolled as providers under Medicare or in other
states. Because of the amount of communication and coordination needed
at the state and federal levels, the exclusion process is complex.
Nevertheless, we believe that more attention must be paid to a system
designed to help ensure the integrity of federal health programs and
protect beneficiaries from poor quality care. In the long run, certain
provisions of the Health Insurance Portability and Accountability Act of
1996 may assist the OIG and states in addressing these problems, but
implementation is most likely several years in the future. Interim actions
are needed.
The OIG has taken several important actions to address some of the
problems we identified. Tracking of incoming exclusion referrals should
strengthen accountability for referrals received from the states and help
ensure that none are overlooked. Training that has been provided to
current staff should help reduce inconsistencies among field offices and
improve the quality of processing, and plans to hire additional staff should
improve the timeliness of exclusion processing. Outreach to states under
Project WEED has resulted in identifying previously unknown exclusion
cases. The OIG plans for further outreach to states under this project may
result in identifying additional cases and may improve the extent to which
states refer cases to the OIG.
Page 19 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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The OIG believes—and we concur—that these actions should help correct
many of the problems we identified. However, we believe that refinements
to these actions would encourage states to refer more unacceptable
providers to the OIG and help the OIG to process these referrals promptly.
For example, the OIG can further strengthen its exclusion referral process
by clarifying reporting requirements and systematically monitoring key
state agencies’ compliance. It could also follow through on its plans to
contact state agencies to ensure that states provide the documentation the
OIG needs to consider an exclusion action. In addition, the OIG could
establish consistent standards—performance goals or benchmarks—to
facilitate the timely processing of state referrals. Finally, OIG exclusion
data need to be distributed to appropriate state officials in a format that
aids timely comparison with state provider files.
We recommend that the HHS Inspector General
Recommendations to
the HHS Inspector • improve oversight of key state agencies that refer cases to the OIG, such as
General the state Medicaid agency and MFCU, to ensure that states understand and
comply with the statutory reporting requirements for state-removed
providers;
• clarify to states that settlements and provider withdrawals to avoid formal
sanctions should be reported to the OIG, in accordance with its regulations
(42 C.F.R. 1001.601);
• provide ongoing, clear, and consistent guidance to the states on the
documentation needed for timely processing;
• establish consistent standards—performance goals or benchmarks—for
the timely processing of state referrals; and
• in collaboration with HCFA, transmit OIG exclusion data either electronically
or by diskette, including Social Security numbers, to state Medicaid
agency officials responsible for enrolling and removing providers.
We provided a draft of this report to the HHS Inspector General. In
Agency Comments providing written comments, she also incorporated comments from HCFA
and Our Evaluation (see app. IV). In general, she concurred with our recommendations.
Concerning our recommendation that the OIG establish consistent
standards—performance goals or benchmarks—for the timely processing
of state referrals, the HHS Inspector General said she had recently
reiterated to regional managers that they should apply criteria in the Office
of Investigation’s Special Agent’s Handbook to permissive exclusion cases.
Page 20 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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The handbook criteria require that exclusion documents be forwarded
immediately to the appropriate field office supervisor for evaluation and,
as a general rule, within 60 working days of receipt, a decision should be
rendered on whether or not the OIG will process the case for a permissive
exclusion action. We believe that reemphasizing existing guidance as to
time frames for evaluating whether to process an exclusion referral is an
important step to improve timeliness. However, evaluating whether
processing of a referral is warranted is only the first component of the
overall exclusion process. Thus, we believe additional performance
measures or goals, such as target time frames for completing the cases and
referring them to headquarters, need to be established to improve
timeliness, as well as to help the OIG measure the effectiveness of its work.
The Inspector General expressed concern with our recommendation to
ensure that state Medicaid officials responsible for enrolling and removing
providers were aware of the availability of automated exclusion data with
Social Security numbers. She said that it would be unreasonable and
unnecessarily costly for HCFA, which is responsible for distributing
exclusion data to the states, to provide the cumulative and monthly lists to
each official in a state agency who might need that information. Instead,
she said, the state official who receives the lists should ensure that all
appropriate officials who need to be notified of the exclusion also receive
the information. Nevertheless, the Inspector General said she would
encourage HCFA to remind state officials of their responsibility to ensure
the lists reach those who need them.
In making this recommendation, our principal concern was that state
Medicaid officials responsible for removing unacceptable providers from
their programs were unaware that cumulative exclusion data with Social
Security numbers were available in automated form. If state officials had
such information, they might find it easier to ensure that OIG-excluded
providers were not participating in their programs; in addition, the
problems we found through computer-matching might not have occurred.
To respond to the Inspector General’s comments, we revised this
recommendation and combined it with a previous one to emphasize that
the OIG and HCFA should collaborate to provide complete exclusion data, in
automated form, to the states.
We also requested comments on a draft of this report from the six state
Medicaid agencies included in our review, as well as the MFCUs in Illinois,
Maryland, and New York. We received written responses from the Illinois,
Maryland, Missouri, and New York state Medicaid agencies. In general,
Page 21 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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they agreed with our conclusions and recommendations. In addition, the
Illinois and Missouri state Medicaid agencies and the New York MFCU
provided clarifying comments, which we incorporated as appropriate.
Illinois, however, questioned our language indicating that federal
regulations require states to report voluntary withdrawals to the OIG. The
state suggested that federal reporting requirements as to negotiated
settlements were unclear. Specifically, the state questioned whether a
direct link existed between the law—which requires state Medicaid
agencies to report providers who are “otherwise sanctioned”—and the
federal regulations (42 C.F.R. 1001.601)—which define the term for
purposes of explaining the circumstances under which the OIG may impose
a permissive exclusion. We agree that the regulation is unclear.
Consequently, we revised our language to remove any implication that the
state had violated federal regulations by not reporting negotiated
settlement agreements to the OIG. Nevertheless,the OIG interprets the
regulation as requiring states to report providers who voluntarily withdraw
from the Medicaid program to avoid an adverse action and communicated
its interpretation in a letter to Illinois, dated February 24, 1997. In addition,
the OIG plans to contact all state Medicaid agencies by spring 1997 to
provide them with guidelines on the kind of cases that fall within the OIG’s
exclusion authority and the documentation needed to support an
exclusion. The guidance will cover provider withdrawals to avoid formal
exclusion.
As arranged with your office, unless you announce its contents earlier, we
plan no further distribution of this report until 30 days after the date of
this letter. At that time, we will send copies of this report to the Secretary
and the Inspector General of HHS, the Administrator of HCFA, state officials
in the six states we visited, and other interested parties. We also will make
copies available to others upon request.
Page 22 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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Please call me at (312) 220-7600 or Kathryn G. Allen, Assistant Director, at
(202) 512-7059 if you or your staff have any questions about this report.
Other major contributors to this report include Robert T. Ferschl; Paul T.
Wagner, Jr.; Robert E. Lippencott; Alfred R. Schnupp; and Jonathan H.
Barker.
Sincerely yours,
Leslie G. Aronovitz
Associate Director, Health Financing and
Systems Issues
Page 23 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Contents
Letter 1
Appendix I 26
Scope and
Methodology
Appendix II 28
Legal Basis for
Excluding Providers
Under the Social
Security Act
Appendix III 29
OIG Process:
Problems With State
Exclusion Referrals
Appendix IV 34
Comments From the
OIG
Table Table I.1: Exclusion Referrals Reviewed by GAO 26
Abbreviations
HCFA Health Care Financing Administration
HHS Health and Human Services
MFCU Medicaid fraud control unit
NPI National Provider Identifier
OIG Office of the Inspector General, HHS
Page 24 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Page 25 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix I
Scope and Methodology
To understand federal and state processes for excluding providers from
Medicaid, we discussed the processes with Medicaid officials in six states,
four OIG field offices, and OIG headquarters. In our six judgmentally
selected states—Illinois, Maryland, Missouri, New York, Virginia, and
Washington, D.C.—we spoke with officials who managed units that
(1) enrolled providers in state Medicaid programs, (2) removed these
providers when necessary, or (3) operated computer systems supporting
those functions. In these states, we also contacted officials from the state
MFCU—to obtain information on its fraud and abuse convictions—and
selected state licensing boards—to understand the processes for
disciplining providers that violate state licensing requirements.
In the OIG’s Chicago, New York, Philadelphia, and Washington, D.C., field
offices—which process referrals from the six states—we met with staff
responsible for processing referrals; in OIG headquarters, we met with
officials who make exclusion decisions and prepare the cumulative and
monthly lists of excluded providers. At HCFA, we met with officials
responsible for distributing OIG exclusion data to state Medicaid agencies
and others. We also interviewed officials at OIG headquarters and HCFA to
determine their plans to establish an Adverse Action Data Bank and
develop a unique health care identifier, as required by the Health
Insurance Portability and Accountability Act of 1996.
To examine how well the OIG’s provider exclusion process was working,
we examined a sample of cases, referred by selected state agencies, to
determine their disposition by the OIG. Because field offices did not always
log in or otherwise account for all referrals they received, we could not
identify the universe of all cases from which we could draw a sample.
Instead, we judgmentally sampled referrals made by state agencies to the
Chicago, New York, and Philadelphia OIG field offices. See table I.1 for the
OIG field offices and state agencies we visited and the number of cases we
reviewed.
Table I.1: Exclusion Referrals
Reviewed by GAO OIG field office Referring state agency Referrals reviewed
Chicago Illinois Department of Public Aida 18
Illinois State Police (MFCU) 14
Missouri Division of Medical Servicesa 6
New York New York Department of Social Servicesa 28
Philadelphia Maryland MFCU 22
Total 88
a
State Medicaid agency.
Page 26 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix I
Scope and Methodology
In general, these cases represented referrals that state agencies had made
to OIG field offices during 1994 and 1995. We reviewed the case files at OIG
field offices from the Illinois and New York state Medicaid agencies and
the Maryland MFCU. For the Illinois MFCU and Missouri Medicaid agency
cases, we only determined their status at the OIG. In addition, for selected
Illinois and New York Medicaid referrals, we determined if the providers
were enrolled in Medicare, according to the Medicare contractors serving
those states. Because these cases were not randomly selected, results
cannot be generalized to all such cases referred by the states or processed
by the OIG field offices and headquarters. However, the results of the OIG’s
Project WEED indicate that the problems we identified through our work
may be pervasive. In determining the disposition of permissive cases, we
did not question OIG decisions on whether an exclusion was warranted.
To determine whether any nationally excluded providers were still
providing services under state Medicaid programs, we compared the OIG’s
February 1996 list of excluded providers against states’ active provider
files. To ascertain whether states were reporting to the OIG as required, we
also compared states’ lists of providers excluded from their programs
against the OIG’s excluded provider list.
We performed our work between November 1995 and January 1997 in
accordance with generally accepted government auditing standards.
Page 27 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix II
Legal Basis for Excluding Providers Under
the Social Security Act
Section of the act Exclusion reason
1128(a)(1)a Program-related conviction
1128(a)(2)a Conviction for patient abuse or neglect
1128(a)(3)a Felony conviction related to health care fraud
a
1128(a)(4) Felony conviction related to controlled substances
1128(b)(1) Misdemeanor conviction related to health care fraud
1128(b)(2) Conviction for obstructing an investigation
1128(b)(3) Misdemeanor conviction related to controlled substances
1128(b)(4) License revocation or suspension
1128(b)(5) Suspension or exclusion under a federal or state health care
program
1128(b)(6) Excessive claims or furnishing of unnecessary or substandard
items and services
1128(b)(7) Fraud, kickbacks, and related activities
1128(b)(8) Entities owned or controlled by a sanctioned individual
1128(b)(9) Failure to disclose required information
1128(b)(10) Failure to supply requested information on subcontractors and
suppliers
1128(b)(11) Failure to provide payment information
1128(b)(12) Failure to grant immediate access
1128(b)(13) Failure to take corrective action
1128(b)(14) Default on health education loan or scholarship obligations
1128(b)(15) Individuals controlling an excluded entity
1128A(a) Imposition of a civil money penalty or assessment
1156(b) Peer review organization recommendation
a
Mandatory exclusion provisions.
Page 28 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix III
OIG Process: Problems With State Exclusion
Referrals
Several examples of (1) cases for which the OIG had no record of state
exclusion referrals when we initially inquired and (2) delays in OIG
processing of state exclusion referrals (discussed on pp. 5-8). The
following are additional examples of these two problems, which we
identified in both the Chicago and New York field offices.
No Record of State
Referrals
Example 1 On June 2, 1995, Illinois notified the OIG’s Chicago field office that it had
removed a physician from its Medicaid program for providing poor quality
care to Medicaid beneficiaries. For example, the state found that the
physician often prescribed medications that had no correlation to patient
symptoms or diseases and that his diagnoses were often unsupported. In
one instance, the physician had prescribed a medication with a high sugar
content for a diabetic. In another, he had prescribed the wrong medication
for an eye problem. The OIG field office had no record of this case, when
we inquired in March 1996. After our review, the field office obtained
information on the removal and began processing the case. The physician
was excluded in December 1996—18 months after the state first reported
the case to the OIG. During this time period, the physician was enrolled in,
but did not bill, Medicare.
Example 2 The Chicago field office had no record, when we inquired in March 1996,
of a physician who had (1) been removed from the state Medicaid program
in September 1995 for defaulting on a state student loan and (2) had his
license revoked in October 1995 for leaving a hospitalized patient without
physician coverage. As in the case above, the field office obtained
information on the case after our review and forwarded the case to
headquarters in June 1996. The case remained unresolved, however, as of
January 1997, over 14 months after it was first referred by the state of
Illinois.
Example 3 When we inquired in March 1996, the Chicago field office had no record of
a physician who, according to state files, had been removed from the
Illinois Medicaid program in September 1995 and reported to the OIG the
following month. The state had removed the physician for repeatedly
Page 29 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix III
OIG Process: Problems With State
Exclusion Referrals
providing harmful and grossly inferior care to Medicaid beneficiaries.
Among the state’s charges were that the physician failed to observe a
patient during the 18 hours she was in labor in a hospital or to be present
at the delivery, placed a patient at risk by not promptly treating a bladder
infection, and failed to refer a patient to a specialist after long-term
treatment did not control his blood pressure. The field office subsequently
opened a case on the physician in April 1996. According to field office
officials, the case remains unresolved as of January 1997. After this
physician was excluded from Medicaid, he was paid over $9,000 (through
Dec. 1996) for services provided to Medicare beneficiaries in Illinois.
Example 4 In March 1996, the Chicago field office had no record of a referral sent by
the Illinois Medicaid agency 9 months earlier, in June 1995. The state had
removed the provider, a transportation company, from the Medicaid
program for overbilling. The case did not meet OIG criteria for exclusion,
OIG officials later said.
Example 5 New York excluded a durable medical equipment supplier from Medicaid,
effective June 1994, on the basis of a consistent disregard for Medicaid
rules and regulations, as well as unacceptable recordkeeping practices.
The state found over 2,000 claims, totaling more than $120,000, for which
the provider could supply no documentation; for another 148 claims,
totaling about $9,000, the documentation available was inadequate. About
$21,500 of these overpayments had been collected as of November 1996.
Over 2 years have elapsed since this provider was removed by the state,
but the New York field office had no record of an exclusion.
Example 6 The New York field office had no record of a durable medical equipment
dealer who had been excluded from the state’s Medicaid program in
September 1994, after an audit revealed that the provider had billed for
items not ordered by physicians and had “upcoded” some bills, charging
for custom-made items when standard items were provided.
Page 30 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix III
OIG Process: Problems With State
Exclusion Referrals
Delays in Processing
State Referrals
Example 1 The OIG excluded a transportation company 16 months after the Illinois
Medicaid program reported that it had removed the company for billing for
unauthorized services, using improper procedure codes, and failing to
keep proper records. The field office case file showed no activity for
lengthy periods.
Example 2 Over 16 months elapsed—including one 9-month period when no
processing occurred—before the OIG excluded a pharmacy that had
overcharged the Illinois Medicaid program by $136,000.
Example 3 After an audit revealed incomplete medical records, no documentation of
patient medical histories, and multiple quality-of-care problems, New York
removed a physician from Medicaid for 5 years, effective March 1995. The
OIG’s New York field office was notified of the case in June 1995, but did
not start processing the case until February 1996. Fourteen months after
receiving the referral, the OIG excluded the provider.
Example 4 New York’s Medicaid agency excluded a physician for 5 years, in
April 1994, after (1) an audit concluded the physician was overprescribing
drugs and (2) an undercover investigator was able to obtain prescriptions
on request, after a cursory examination. We could not determine from
state or OIG case files when the OIG was notified, but about a year after
state removal, the New York field office—because it had a backlog of
work—transferred the case to the Boston field office. Thirteen months
later, the Boston field office recommended exclusion and, in
September 1996, the physician was excluded nationwide—more than 2
years after first being removed from New York’s Medicaid program.
Between the state removal and federal exclusion dates, Medicare paid this
provider over $8,700.
Example 5 New York excluded an ophthalmologist for 2 years, effective May 1995,
after an audit determined that the physician rendered inappropriate care
to Medicaid beneficiaries. The state charged, among other things, that the
Page 31 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix III
OIG Process: Problems With State
Exclusion Referrals
provider performed excessive glaucoma testing and treated patients
inappropriately, using medications that were not indicated. In some cases,
patients were placed at substantial risk. The state notified the New York
OIG field office of this case in August 1995, and the OIG excluded the
provider 1 year later.
Example 6 New York excluded a registered physician assistant for 5 years, effective
March 1995, for conducting an unacceptable practice, maintaining
inadequate records, and providing medical care and services far in excess
of patients’ needs. Among other things, the state charged that the
physician assistant often prescribed medications without adequate
indication and provided medical care to Medicaid beneficiaries without
adequate supervision of a licensed physician. The state notified the OIG of
this case in late April 1995, but other than assigning the case a file number
some time in 1996, the case file showed no activity when we reviewed it
almost 19 months later. Given the age of this case and the office’s backlog,
the regional inspector general said the case was unlikely to be processed
for exclusion.
Example 7 New York removed a physician from its Medicaid program for 5 years,
effective May 1994, for false claims, unacceptable recordkeeping,
excessive services, and failure to meet recognized standards. For example,
the state claimed that the physician provided potentially dangerous care
by frequently prescribing the drug Elavil to substance abusers. The state
also referred the provider to the state licensing board. We could not
determine precisely when the field office received this case, but more than
2-1/2 years after the state removed the physician, the case remained
unresolved. Like the case above, the regional inspector general said that
because of the age of this case, it was unlikely to be processed for
exclusion.
Example 8 New York removed a podiatrist from Medicaid, in May 1995, after she was
convicted of billing Medicaid for services not actually provided. The OIG’s
New York field office was already aware of this case at the time of the
state removal because it had been notified of the physician’s indictment in
February 1994. Although the field office lacked key documents needed to
process the case for exclusion, the case file showed no evidence of
follow-up until November 1996. Since the time the podiatrist had been
removed from Medicaid in New York, Medicare had paid her about $1,900.
Page 32 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix III
OIG Process: Problems With State
Exclusion Referrals
Example 9 A physician assistant was removed from Medicaid in New York, effective
September 1995, based on an evaluation of quality of care, which showed
that he did little to attempt to improve the health of patients other than
frequently repeating laboratory tests. The Medicaid agency concluded that
this was particularly dangerous because many of his patients had serious
illnesses. In addition, there was no evidence of the assistant’s supervision
by a licensed physician. The OIG was notified of this case in November
1995, but did not open its own case file until May 1996. The case was
referred to headquarters in July 1996 and was still pending when we
reviewed the file in November 1996.
Page 33 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix IV
Comments From the OIG
Page 34 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix IV
Comments From the OIG
Page 35 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix IV
Comments From the OIG
Page 36 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix IV
Comments From the OIG
Page 37 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix IV
Comments From the OIG
Page 38 GAO/HEHS-97-63 Medicaid Fraud and Abuse
Appendix IV
Comments From the OIG
(101518) Page 39 GAO/HEHS-97-63 Medicaid Fraud and Abuse
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Address Correction Requested
Medicaid Fraud and Abuse: Stronger Action Needed to Remove Excluded Providers From Federal Health Programs
Published by the Government Accountability Office on 1997-03-31.
Below is a raw (and likely hideous) rendition of the original report. (PDF)