Office of Inspector General Semiannual Report to Congress


Office of Inspector General Semiannual Report to Congress

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On June 1, 2017, the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) published its Spring 2017 Semiannual Report to Congress (“Report”). This Report addresses the OIG’s work and accomplishments for the six-month period of October 1, 2016 through March 31, 2017.

OIG Background

The OIG was established in 1976 with the mission to “protect the integrity of Department of Health & Human Services (“HHS”) programs as well as the health and welfare of program beneficiaries.”

Currently, the OIG is the largest inspector general’s office in the federal government. Daniel R. Levinson, Inspector General, has headed the office for over a decade. The OIG currently employs approximately 1,600 auditors, evaluators, investigators and lawyers who oversee the integrity and efficiency of the Department’s $1 trillion investment in HHS programs.

Report Purposes and Findings

The Inspector General Act of 1978 (Public Law 95-452), as amended, was established to require that the Inspector General report the activities of the OIG to the head of the HHS and Congress on a semiannual basis. The intended purpose of the report is to describe the OIG’s efforts with respect to identifying significant problems, abuses, deficiencies, remedies and outcomes relating to the administration of HHS programs and operations.

The Executive Summary within the Spring 2017 Report emphasized the following issues:

  • Enhancing Safety and Quality of Care;
  • Improving Efficiency of Program Operations;
  • Reducing Improper Payments;
  • Fostering Prudent Payment Policies; and
  • Fighting Fraud in HHS Programs.

Highlighted below is a summary of the information contained within each area of focus.

Enhancing Safety and Quality of Care

  • The OIG continued to examine whether or not states are correcting previously identified nursing home deficiencies.
  • The OIG issued two reports which examined issues affecting Indian Health Service (“IHS”) hospitals’ ability to provide quality care and comply with Medicare standards. These reports described the following current challenges within IHS hospitals: ensuring access to needed care; maintaining clinical competence; recruiting and retaining essential staff; and keeping patients safe despite outdated buildings and equipment.


Improving Efficiency of Program Operations

In order to run programs efficiently, the OIG identifies opportunities to enhance efficiencies in fiscal management, administrative infrastructure and program execution.

  • New Program Implementation: The OIG found that the Centers for Medicare & Medicaid Services (“CMS”) made significant progress with respect to the implementation of the Quality Payment Program (“QPP”). Additionally, the OIG found vulnerabilities during the period that will be need to be addressed in 2017.
  • Sound Financial Management: During the semiannual reporting period, the Report noted that the states selected for audit (Colorado, California and Virginia) did not always invoice and collect all rebates due for drugs administered by physicians. This was consistent with previous findings.
  • Oversight of Grant Portfolio: The HHS has a $100 billion discretionary grant portfolio. The OIG continued its oversight of the discretionary grant portfolio during the semiannual period focusing on childcare grant programs. In one report, the OIG found $10 million in unallowable funds for costs.


Reducing Improper Payments

Per the Report’s Executive Summary, “improper payments, as reported in the Department’s financial statements, have demonstrated a steady increase over the last several years. In FY 2016, the Department reported estimated improper payments of more than $96 billion.”

During this semiannual period, the OIG performed several audits that identified improper payments as a result of issues related to the following eligibility determinations:

  • Express Lane Eligibility: The OIG found that improper Medicaid payments on behalf of potentially ineligible beneficiaries totaled $284.1 million and Children’s Health Insurance Program (“CHIP”) payments for potentially ineligible beneficiaries totaled $10.6 million.
  • Payments after death: The OIG confirmed that Medicare and Medicaid continue to make improper payments on behalf of beneficiaries who are deceased.
  • Incarcerated beneficiaries: The OIG reported that CMS has not taken steps to recoup $34 million in potentially improper payments made on behalf of incarcerated beneficiaries.

Additionally, the OIG performed several audits identifying payments for medical devices and services that were improperly billed by providers. During these audits the OIG discovered the following:

  • Improper Payments for Chiropractic Services: The OIG estimated that $358.8 million of $438.1 million paid by Medicare for chiropractic services was unallowable.
  • Room and Board Costs associated with Home & Community-Based Services (“HCBS”) Waiver Program Payments: State agencies claimed at least $176 million in unallowable Medicaid reimbursements for services under the HCBS waiver program.
  • Improper Payments for Cochlear Devices: Medicare spent $2.7 million inappropriately for cochlear devices that were replaced without cost to the hospital or beneficiary.


Fostering Prudent Payment Policies

  • The OIG reported on several vulnerabilities in hospital billing under Medicare’s 2-midnight policy for determining a patient’s status as inpatient or outpatient. These findings raised concerns about costs to Medicare and beneficiaries.
  • The OIG found that federal payments for Part D catastrophic coverage exceeded $33 billion in 2015, which is more than triple the amount paid in 2010. Research found that spending on high-priced drugs contributed significantly to this growth.


Improving Data Integrity and Information Security

  • During the reporting period, the OIG continued to work on privacy and security of data, focusing on network and web application penetration testing in an effort to protect the privacy and security of the data it collects and maintains.


Fighting Fraud in HHS Programs

During the first half of FY 2017, the OIG reported expected investigative recoveries of over $2.04 billion. OIG also reported 468 criminal actions against individuals or entities that engaged in crimes against HHS programs, 461 civil actions and 1,422 exclusions of individuals and entities from participation in Federal healthcare programs.

Additionally, the OIG conducted a wide array of enforcement activities during the semiannual period. Key areas for enforcement included the following:

  • Prescription drugs: The OIG is committed to combating drug diversion and pursues numerous cases against providers who knowingly engage in drug diversion.
  • Care in non-institutional settings: The OIG continues to focus on fraud in non-institutional settings, including in Medicare home health services and HCBS, including personal care services.
  • Grant fraud: The OIG found that a significant portion of the OIG’s enforcement efforts target grant fraud. In one grant fraud case during the reporting period, an executive of a healthcare center received an 18-year prison sentence and was ordered to pay $13.5 million in restitution for embezzling $17 million in HHS grant funds.



In sum, the 77-page Report includes a plethora of audit and evaluation results of OIG investigations during the reporting period. As a result of the previous reporting period, the OIG indicated that it will focus on the following priority areas in the future:

  • Protecting beneficiaries from prescription drug abuse;
  • Reducing improper payments for home health services in fraud “hot spots”;
  • Improving program integrity for the Child Care and Development Fund grant programs; and
  • Maximizing the effectiveness of State Medicaid Fraud Control Units.

For additional information, a complete copy of the Report can be accessed below:

OIG Spring 2017 Semiannual Report to Congress

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