Medicaid Fraud and Abuse:

Stronger Action Needed to Remove Excluded Providers From Federal Health Programs

HEHS-97-63: Published: Mar 31, 1997. Publicly Released: Apr 30, 1997.

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Pursuant to a congressional request, GAO reviewed the Department of Health and Human Services (HHS) Inspector General's (OIG) process for excluding providers from federal health care programs.

GAO noted that: (1) over the years, the OIG, working with state agencies, has excluded 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; (2) several weaknesses in this exclusion process allow many unacceptable providers to remain on the rolls of federal health programs; (3) the weaknesses GAO identified include: (a) lack of controls at OIG field offices to ensure that all state referrals received are reviewed and acted on promptly; (b) inconsistencies among OIG field offices as to the criteria for excluding providers; (c) lack of oversight to ensure that states make appropriate exclusion referrals to the OIG; and (d) problems states experience in attempting to identify and remove from their programs providers that appear on the OIG's exclusion list; (4) these weaknesses place the health and safety of beneficiaries at risk and compromise the financial integrity of Medicaid; (5) 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; (6) OIG officials attributed many of these problems to repeated cutbacks in resources occurring in the past several years; (7) 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; (8) some of this funding, officials said, will be used to hire additional staff to process exclusion referrals; (9) the act also includes tools and resources to facilitate identifying unacceptable providers; (10) 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; (11) when implemented, these tools should help to limit the number of providers excluded from one program that continue to participate in others; (12) in the interim, the HHS Inspector General has initiated actions to improve the effectiveness of the exclusion process; and (13) while these efforts are significant, GAO believes further refinements are necessary to improve the exclusion process.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The HHS Inspector General should establish consistent standards, performance goals or benchmarks, for the timely processing of state referrals.

    Agency Affected: Department of Health and Human Services: Office of Inspector General

    Status: Closed - Not Implemented

    Comments: OIG guidance requires that regional OIG officials decide within 60 days whether each exclusion referral will be processed for exclusion. This is the only benchmark the OIG contemplates for the exclusion process because there is so much variation in the time needed for exclusion processing. However, the OIG has increased its emphasis on promptly and responsively processing state referrals for nationwide exclusion. In fact, the number of exclusions processed based on state referrals nearly doubled from fiscal year 1997 to 1998. GAO was told that this was the result of GAO's work on this report, which caused the OIG to focus more on the part of the exclusion process that dealt with state referrals.

    Recommendation: The HHS Inspector General should provide ongoing, clear and consistent guidance to the states on the documentation needed for timely processing.

    Agency Affected: Department of Health and Human Services: Office of Inspector General

    Status: Closed - Implemented

    Comments: Documentation needed for prompt processing of exclusion referrals is an issue to be addressed by draft correspondence from the OIG to HCFA regarding needed state plan changes. The OIG has examined Medicaid agency state plans for requirements related to statutory reporting requirements for excluded providers; state plan provisions were considered inadequate. The OIG sent correspondence to HCFA to encourage HCFA to incorporate appropriate requirements in state plans. HCFA, however, has declined to amend state plans and does not plan to do so. Other agency actions were related to this recommendation.

    Recommendation: The HHS Inspector General should 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).

    Agency Affected: Department of Health and Human Services: Office of Inspector General

    Status: Closed - Implemented

    Comments: This recommendation should be addressed by state plan changes that the OIG plans to propose to HCFA. The OIG has examined Medicaid agency state plans for requirements related to statutory reporting requirements for excluded providers; state plan provisions were considered inadequate. The OIG sent correspondence to HCFA to encourage HCFA to incorporate appropriate requirements in state plans. HCFA, however, has declined to amend state plans and does not plan to do so. other agency actions were related to this recommendation.

    Recommendation: The HHS Inspector General should improve oversight of key state agencies that refers cases to the OIG, such as the state Medicaid agency and Medicaid fraud control unit, to ensure that states understand and comply with the statutory reporting requirements for state-removed providers.

    Agency Affected: Department of Health and Human Services: Office of Inspector General

    Status: Closed - Implemented

    Comments: The OIG has examined Medicaid agency state plans for requirements related to statutory reporting requirements for excluded providers; state plan provisions were considered inadequate. The OIG sent correspondence to HCFA to encourage HCFA to incorporate appropriate requirements in state plans. HCFA, however, has declined to amend state plans and does not plan to do so. Other agency actions were related to this recommendation, including implementing a tracking system to ensure accountability over exclusion cases, and expedited staff training and oversight over Medicaid fraud control units. Also, the report was credited with convincing states to do a better job of reporting providers barred from state Medicaid programs and providing the documentation the OIG needs to process exclusions.

    Recommendation: The HHS Inspector General should, in collaboration with the Health Care Financing Administration, transmit OIG exclusion data either electronically or by diskette, including social security numbers, to state Medicaid agency officials responsible for enrolling and removing providers.

    Agency Affected: Department of Health and Human Services: Office of Inspector General

    Status: Closed - Implemented

    Comments: The OIG asked HCFA to comply with this GAO recommendation even before the report was issued, and HCFA began sending this information to appropriate state agencies shortly after the report was issued. In fact, the OIG has gone even further than GAO recommended by asking HCFA to provide similar information to managed care plans that have contracted to provide Medicare or Medicaid services.

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