Good Morning, Mr. Chairman and members of the Subcommittee. I am June Gibbs
Brown, Inspector General of the U.S. Department of Health and Human Services. I
am-pleased to be here because, for the first time in several years, the OIG is
in a position to deal effectively with Medicaid exclusion leads. My testimony
will address your questions -- specifically, the length of time it takes to
exclude providers from Medicare that States have already excluded from Medicaid;
the form and usefulness of information provided to States on exclusion cases;
and the effectiveness of permissive exclusions.
I would like to state at the outset that many of the problems cited by GAO
are valid despite the progress we have made in this area. The OIG expects to
exclude about 1,500 providers by the end of this fiscal year. As of July 3 1,
we had implemented 1,23 7 exclusions, of which 463 were mandatory and 774 were
permissive. We are proud of the fact that fewer than one percent of OIG-imposed
exclusions have ever been overturned on appeal.
My staff and I met with GAO representatives on several occasions in recent
weeks to discuss their observations and recommendations, and we are in general
agreement with them. In May of this year when we got our Fiscal Year 1996
budget, we began implementing a program to shore up our effectiveness on
exclusions. We call it Project WEED. In addition, the OIG field offices now
maintain a data base on all incoming exclusion leads. We developed Project Weed
last November as a strategy to deal with exclusion leads. We began
implementation shortly after our funding stabilized. I will explain more about
this project later in my testimony.
Support from the Congress
Since your June 1995 hearing on administrative sanctions, your staff and
ours have met on several occasions to develop proposals to enhance our ability
to get dishonest providers out of the programs. These proposals were reflected
in the bills you sponsored along with Congressman Schiff. We particularly urge
you to continue to pursue the provision requiring Medicare contractors and State
Medicaid agencies to be fiscally liable for payments they make to excluded
providers. I would also like to mention that we met with Congressman Towns'
staff and appreciate his support on these issues as well.
The recent passage and signing of the Health Insurance Portability and
Accountability Act of 1996 (Public Law 104-19 1) provides more resources and
stronger authorities for the OIG. Therefore, we are now in a position to make
greater progress in excluding bad providers and in precluding inappropriate
payment to them.
The Operational Environment
I would like to describe the operational environment in which exclusion
leads are processed and some of the challenges we face. We are giving priority
attention to GAO's concern about tracking incoming exclusion leads. The current
lack of uniformity evolved out of a complex operational environment in which
exclusion leads, not only from the State Medicaid agencies, but from many other
sources in each of the 50 States, flow into 8 OIG field offices. The staff time
available to develop these leads has been minimal at best; and, at one point in
the past, work on certain permissive exclusion leads had to be suspended.
Budget constraints in 1992, prior to MY appointment, caused the OIG to
reevaluate priorities. Limited funding caused the office to realign field
office configurations, removing the OIG presence from some States. At that
time, the OIG reviewed the exclusion authorities and decided that OIG resources
could be put to better use by not acting on cases where State licensing boards
or other Federal State health care programs had already revoked or suspended
licenses or participation privileges and the practitioner continued to live in
the State that took the action. The OIG believed the State action protected
patients since unlicensed physicians could not treat Medicare or Medicaid
When I became Inspector General in November 1993, 1 rescinded that directive
and ordered that all categories of exclusion leads be screened and processed.
We also began expanding the methods by which we report exclusion actions to
governmental and private entities and the public. For example, exclusion
listings are now available on the Internet. I also asked my staff to increase
educational outreach to reporting entities on the type of documentation we need
in order to take action on a case at the national level.
Some recent outreach examples include participation in the Twelfth Annual
Conference of the National Association of Surveillance Officials and
presentations before the New Mexico Medicaid Fraud Control Unit training
conference, a joint endeavor across the Medicaid program agencies within that
State, as well as extensive sanction training conducted in the New York and
Boston regional offices for all Medicare contractors within their jurisdiction.
At present, for each of the 50 States and U.S. Territories, there are
individual State agencies overseeing the Medicaid programs, separate Medicaid
Fraud Control Units, multiple Medicare contractors processing claims for
services provided to Part A and Part B beneficiaries and railroad retirees,
Medicare Fraud Control Units, multiple licensing boards, titles V and XX State
agencies, as well as Federal and State health care agencies too numerous to
categorize. All of these agencies funnel conviction, disciplinary and "lead"
information into our field offices. Attached is a chart showing the flow of
these multi-source leads through our field offices for development and then into
headquarters for appropriate action.
Although there are newer technologies, such as accessible databases, that
enable the Federal and State health care agencies and the public and private
sectors to communicate in a faster and more meaningful fashion, the problem
still remains that many agencies and entities are reporting to our office in
traditional and less efficient ways.
I want to emphasize that the OIG has always pursued quality of care cases.
Where the patient population was subject to known jeopardy, OIG policy has been
to take whatever action is within its scope of authority to bar providers from
The scope of authority for licensing board actions and other State and
Federal program actions (section 1128(b)(4) and (b)(5)) is a key element here.
The OIG sometimes cannot act upon referrals because disciplinary actions taken
by licensing authorities or other Federal or State agencies may not meet Federal
statutory requirements. That is why the OIG treats such reports from other
sources as "leads" for potential action. Once it is established that these
leads have merit and the potential exists for exclusions to be substantiated,
then our field offices ire able to act upon the information.
The OIG does not have the authority to act on a national level on a "moral
turpitude" finding by the State, on a practitioner's failure to renew his or her
license, or on items that are not related to the delivery of a health care item
or service, like spousal abuse, vehicular manslaughter, drunken-driving, or
failure to make child support payments. Thus, not every referral made to our
offices is actionable by the OIG.
This office can act upon violations involving professional performance,
professional competence, or financial integrity. However, even when the
State's actions do meet our criteria by being related to professional
performance, professional competence, or financial integrity. there may be other
reasons why we cannot take an exclusion action. For instance, we may only
exclude an individual or entity that has been suspended or excluded from
participation, or "otherwise sanctioned" in a final action in which the State
took a disciplinary action. Interim actions such as probation, fines, or
continuing education do not equate to final actions if the subject can continue
to practice medicine while meeting the State's restrictions.
The OIG retains the discretionary ability to act upon these cases under the
authorities contained in sections 1128(b)(6) and 1156 of the Social Security
Act. However, both of these procedures are extremely prolonged and labor
intensive. The OIG has devoted the necessary resources to such cases,
particularly if they affect quality of care; and they are very time consuming
and expensive. Let me give you one example.
- In February 1992, the OIG excluded a California oncologist for 10 years
under section 1128(b)(6)(B) because the OIG determined that he had rendered over
3,900 excessive, substandard, unnecessary, and potentially risky services to
seven Medicare beneficiaries over a six- year period of time. Subsequent to that
exclusion, the peer review organization (PRO) submitted two separate
recommendations that this same doctor be excluded under section 1156 because he
had failed to comply substantially with his obligations in the care of six
Medicare beneficiaries with 10 hospital admissions. This care was found to have
included, among other violations, inappropriate blood transfusion, inappropriate
treatment for sepsis, and failure to detect the development of a decubitus ulcer
while the patient was under medical care during a prolonged hospitalization. In
August 1992, the OIG acted on the PRO's recommendation and excluded the doctor
for another 10 years to run concurrently with the first exclusion. After a
lengthy and extremely costly hearing, the administrative law judge upheld the
OIG's exclusion actions and determined that the exclusion should be permanent.
Although the State licensing authority and various payer agencies had been
investigating this physician for many years without successful result, the OIG
took the lead in implementing disciplinary action. However, once the exclusion
was in place, the licensing board did revoke the doctor's license. Then it
stayed the revocation and put the license on probation. The stay has since been
lifted but if the OIG had not devoted its investigative power, resources, and
financial backing to excluding this physician, the Medicare/Medicaid patient
population would have continued to be at grave risk during the four years that
the licensing board took to get to an exclusionable point in it's process.
Communication-The Key to Success
When an exclusion is imposed, the OIG makes every effort to publicize it.
We send individual notification letters with the subject's personal identifier
information (i.e., social security number, date of birth, unique physician
identification number (UPIN), program provider number, license number, etc.) to
all of the State agencies, Medicare contractors, licensing board, and any known
employer in the State where the subject practices medicine. We also send copies
of the exclusion notice to the subject's attorney (if known), the Public Health
Service, Department of Justice, U.S. Attorney, and any peer review organization
that may be deemed appropriate.
Monthly, we notify payer agencies of the exclusions being implemented;
specific notice is provided to the Health Care Financing Administration (HCFA)
for its use in notifying all Medicare and Medicaid agencies via its monthly
listing (HCFA Publication 69). In order to protect beneficiaries from financial
liability, the Medicare contractors notify the beneficiaries when claims are
submitted for services rendered by an excluded party. The contractor will pay
the first claim submitted by the beneficiary and inform the beneficiary that no
more services are reimbursable because of the provider's exclusion status.
We also notify payer agencies administering the Block Grants to States for
Social Services (title XX) and Maternal and Child Health Service Block Grants
(title V) and send a separate notice to the Federation of State Medical Boards;
Office of Civilian Health and Medical Program of the Uniformed Services,
Department of Labor, Social Security Administration, Veterans Affairs, and
General Services Administration (GSA).
The Federal Debarment List (which precludes excluded providers from
participating in Government-wide procurement and non-procurement contracts) is
updated through exclusion information that the OIG provides to the GSA. It does
not include identification numbers.
The OIG notifies the general public of exclusion actions through the Federal
Register which is available in hard copy and through the Internet. In addition,
cumulative reports of all exclusions in effect are published approximately twice
a year and are routinely released to recipients of the HCFA monthly reports
(Publication 69), payer agencies, and on a request-specific basis, to all other
interested parties. We remove providers from the cumulative list only if and
when they are reinstated. Since its last printing in February 1996, the OIG has
distributed more than 750 hard copies and released more than 330 diskettes
containing the cumulative sanction report. These copies are in addition to the
routine distribution that HCFA makes to all of the Medicare contractors and each
of the Medicaid State agencies.
Since early 1996, the cumulative sanction report has been provided on IGnet
which is an Internet resource of more than 60 Federal Offices of Inspector
General. IGnet also gives the public access to the OIG's audit, inspection,
semi-annual reports, and other related documents. The user can download the
cumulative report as a database file that can be sorted or as a desktop
published file that looks like the printed version and is selectively printable.
Recently, we added the 'update" exclusion information published monthly in the
Federal Register to the same IGnet site. Thus, IGnet contains the names of all
of the OIG exclusions currently, in effect and is available to anyone with World
Wide Web access. Information about accessing this Web page is attached.
Although many users are beginning to go directly to the Internet for
exclusion data, the OIG also receives and responds to calls originating from the
General public, Medicare contractors and State fiscal agents, other Federal and
State agencies, credentialing agencies, licensing boards, HMOs, hospitals, and
other members of the health care industry. For the first six months of this
fiscal year, the OIG responded to 11,317 written requests and 3,640 telephone
requests for exclusion information on specific health care providers, mostly
medical doctors. We project that more than 25,000 responses to requests will be
made before the end of this fiscal year.
There are various other databases and methods for reporting many types of
disciplinary or malpractice actions involving a multitude of health care
providers. These include the Federation of State Medical Boards Data Bank, the
National Practitioner Data Bank, and certain requirements of the Joint
Commission on the Accreditation of Healthcare Organizations. The OIG has been
working with the Public Health Service and the Health Care Financing
Administration to have exclusion data input to the National Practitioner Data
Bank so hospitals and licensing boards, in the course of conducting their
required responsibilities and routine business, can obtain the current exclusion
status of all physicians and dentists in the United States .
Pursuant to the Health Care Quality Improvement Act of 1986, The National
Practitioner Data Bank collects information on physicians and dentists
concerning malpractice payments, clinical privilege actions, and adverse
licensure actions taken by hospitals, insurance companies, licensing boards, and
professional societies. This information is then available to all hospitals,
licensing boards, and professional societies. If the Medicare provider
information is included in the files, OIG sanction information will reach the
desired audience and substantially cut down on the number of excluded
practitioners who continue to receive inappropriate program payment through
hospital cost reports because hospitals are required by law to query all new
employees and all current employees on a biannual basis. An interagency
agreement is in final clearance, and we expect that the exclusion information
will become available to data bank users in Fiscal Year 1997.
While the existing databases are helpful tools, there has been no
comprehensive database for the mandatory reporting of "final adverse actions"
such as criminal convictions, civil judgements, settlements, administrative
exclusions, and disciplinary actions imposed against health care providers.
The new Adverse Action Data Bank to be established under the Health
Insurance Portability and Accountability Act of 1996 will facilitate broader
communication across the entire spectrum of public and private health care
organizations. It authorizes the collection and dissemination of information on
any final adverse action taken against any health care provider, supplier, or
practitioner. In conjunction with the Department of Justice, the OIG is charged
with overseeing this endeavor. We will be a prime contributor to and user of
this data bank, while overseeing its structure, procedures, and regulations.
Further, the OIG has been working with the National Registry, which is the
HCFA contractor responsible for maintaining the Medicare files on the Unique
Physician Identification Number (UPIN), to update its historical exclusion data
base to include the UPIN with the subject's personal identifier information.
Once assigned, that number is carried on all exclusion notification letters sent
to payer agencies and Medicare contractors and is included on all OIG sanction
reports. Including these numbers allows the Medicare contractors to more
readily identify excluded physicians and lessens the chance that physicians who
move from State to State or who use more than one provider number (e.g., group
numbers and/or multiple location numbers) can obtain Medicare reimbursement.
We look forward to the day that HCFA assigns unique identification numbers
for all health care providers. The availability of such information should make
all our jobs easier by broadening the scope of the notification process and by
substantially reducing the opportunities for inappropriate program payments and
We are convinced that this level of communication has a far- reaching effect
on excluded providers. It tells payer agencies that all program reimbursement
must cease; it alerts employers that the subject has been shown to be
untrustworthy and has a history of disciplinary actions; it puts third party
payers and licensing board authorities on notice that a sanction has been
imposed and the reasons for it; and, it provides an opportunity for the ongoing
exchange of information between Federal, State, and private components dedicated
to policing the health care industry. Public Law 104-191 now requires unique
numbers for all providers and will allow for a more manageable, efficient, and
Coordination with the Congress
The OIG testifies before this subcommittee regularly and has made
recommendations for the development of a uniform provider agreement, for the use
of unique physician identification numbers, and for extending the scope and
penalties of the exclusion process itself.
Mr. Chairman, you and Congressman Schiff, your subcommittee, and the
committee supported our proposal to have the Medicare contractors and Medicaid
State agency made liable for and restoring any inappropriately spent program
funds that were caused by their failure to implement exclusions timely and
accurately. We thank you for that, and we continue to believe that unless these
agencies are made financially liable for their mistakes, there is little
incentive for doing the job properly. We ask for your continued support in this
We are pleased that many of our recommendations on the application of
certain health anti-fraud and abuse sanctions have been considered and included
in recent statutory changes. Such changes include expanding sanction
authorities to cover all Federal health care plans and establishing statutory
authority for minimum periods of exclusion for certain individuals and entities
subject to permissive exclusion from Medicare and the State health care
Finally, I would like to describe an initiative I mentioned earlier. We
developed Project WEED last November to increase the number and quality of
exclusion cases being developed by our field offices. After our budget
stabilized, we began this endeavor to ensure that we do the best we can with
available resources. The project ensures, through staff training and improved
guidelines, that the documents and information necessary to process these cases
are being gathered and developed in a timely, consistent, and effective manner.
Eight senior program analysts in our investigations field offices are
assigned to the project. Sanction training and an overview of the project goals
were provided to the analysts in July. During July and August this team
identified over 900 potential mandatory sanctions that had not been forwarded to
our office. These leads are currently being pursued. Eleven additional
personnel are scheduled to receive extensive sanctions training the week of
September 9, 1996.
We know that it is important that the OIG have continuity in the exclusion
process. It is also important that the States provide the OIG with the
information necessary to make an appropriate exclusion decision. We have
learned through our exclusion experience that inconsistencies have developed.
This information was also documented in the GAO review. Through the Project
Weed initiative, we will resolve the inconsistencies by proper and timely OIG
staff training. In addition, we are initiating an outreach effort to State
Medicaid agencies to ensure that all required information is forwarded to the
Thanks to the recently enacted Health Insurance Portability and
Accountability Act of 1996, we are fully confident about the future. This new
law provides additional budget and manpower allocations to the OIG, strengthens
our existing exclusion authorities, requires unique provider numbers, and
expands our abilities to impact other Federal, State, and local health care
Attached for the record is general information about available sanction
authorities and the exclusion process.
Authorities and General Information
Title XI of the Social Security Act provides a wide range of authorities to
exclude individuals and entities from participating in the Medicare, Medicaid,
Maternal and Child Health Services Block Grant and Block Grants to States for
Social Services programs (titles XVIII, XIX, V and XX of the Act respectively).
By exercising the exclusion authorities, the OIG helps fulfill the Secretary's
primary obligation to protect the health and safety of patients receiving care
as well as to protect the fiscal integrity of the programs.
The Secretary has delegated 42 administrative authorities to the OIG. The
most significant in terms of priority and workload are found in section 1128(a)
of the Act which sets forth mandated enforcement provisions and are closely
allied with the criminal provisions of the law. This section requires the OIG
to exclude any individuals or entities for a minimum period of 5 years if they
are convicted of a program-related crime or of any type of patient abuse or
The recently signed Health Insurance Portability and Accountability Act of
1996 (Public Law 104-191) expands this mandatory provision to include all felony
convictions related to health care fraud in any program operated or financed by
any Federal, State and local government agency or any felony conviction related
to controlled substances.
This new law also provided authority to exclude individuals with ownership
or control interest in excluded entities. In contrast, sections 1128(a) and
1128(b) of the Act permit, rather than require, the exclusion of individuals or
entities if the OIG determines the action to be warranted. At its discretion,
the OIG takes permissive exclusion actions on misdemeanor convictions for
non-HHS health care violations like fraud, theft, financial misconduct; for
controlled substance violations; for license suspensions and revocations; for
sanctions imposed by other health agencies; for the rendering excessive or
unnecessary services; and, for entities owned or operated by excluded
Coupled with our mandatory exclusion authorities are the Civil Monetary
Penalty Law (CMPL) provisions which allow the OIG to administratively impose
penalties on persons who make false or improper claims for payments under the
Medicare, Medicaid , and other State health care programs. In the past we have
has the authority to impose a CMP of "not more than $2,000", an assessment of
not more than twice the amount claimed" for each item or service presented as
false or improper claims, and impose a permissive exclusion of the provider from
The Health Insurance Portability and Accountability Act of 1996 extends the
current CMP authority to all Federal health care programs and provides for
penalties of up to $10,000 per line item or service, three times the amount of
each false claim, and $ 10.000 for each day a prohibited relationship occurs.
Further, the OIG can exclude health care providers and practitioners who
have defrauded or abused the programs or its beneficiaries. The OIG may also
exclude based on a recommendation received from a peer review organization
because an individual or entity failed to meet their legal obligations to
provide only care that is medically necessary, meeting professionally recognized
standards, and is properly documented. The new law removed an earlier
requirement for a finding of unwillingness or inability to comply with the
provider's raised the monetary penalty amount to $100,000 per violation, and
established a minimum one-year period of exclusion.
Finally, the OIG can exclude health care providers who have failed to repay
or to enter into an agreement to repay a health education assistance loan.
These exclusions are mandatory under section 1892, and the OIG couples that
mandatory authority with section 1128(b)(14) to ensure that the exclusion
extends to the other programs. These exclusions remain in effect until the
debts are completely repaid.
In FY 1995, the OIG obtained more than $296 million in civil monetary and
false claim act penalties and assessments and implemented 1,478 administrative
exclusions. Of these, 504 were section 1128(a) mandatory exclusions, with the
remaining 974 resulting from the permissive authorities delegated under the
various provisions of section 1128(b) of the Social Security Act.
Despite disruptions in workflow caused by both Federal furloughs during FY
1996, the OIG expects to implement about 1,500 exclusions by the end of this
Fiscal year. As of July 31, 1996, we had implemented 1,237 exclusions, of which
463 were mandatory and 774 were permissive.
Alternatives to Exclusions
As an alternative to excluding an individual or entity from program
participation, the OIG may impose a number of civil monetary penalties for a
variety of fraud or abuse violations including fraud, billing or charging
violations, patient and beneficiary protection issues, circumvention of
regulatory requirements, patient "dumping", physician protection, and improper
disclosure of information.
The OIG or Department of Justice may determine that a case cannot be easily
prosecuted and that the taxpayers are better served by settling the case
rather than expending the OIG's limited resources to further investigate it.
When a decision is made to settle a case with a monetary penalty, various
safeguards are included in the settlement agreement. Since most of the
settlements involve payments over a period of time, the safeguards include not
discharging the debt if the individual files for bankruptcy, excluding the
individual or entity if they default on the settlement, and recently, if the
settlement is with an entity, establishing and maintaining a voluntary
Compliance programs are designed to prevent the recurrence of the improper
billing practices that prompted the civil monetary penalty settlement.
Corporate compliance programs are quite specific in terms of actions a company
must take to remain in the Medicare and Medicaid programs. The OIG institutes
appropriate safeguards, and sharply reduces the likelihood for continued
improper activity before deciding to enter into a compliance agreement rather
than to exclude. Currently, there are approximately 40 to 50 compliance plans
in effect; and it is anticipated that, with the tremendous reception that this
program has been given by the health care industry, the caseload will more than
double in the next fiscal year.
Effect of an Exclusion
Once an exclusion takes effect, program payment may not be made for items or
services furnished, ordered, or prescribed by the excluded individual or entity.
Additionally, no Federal or State health care program funds can be used to pay
any salary or fringe benefits, including administrative or management services,
related to the delivery of a health care item or service rendered to a program
patient by an excluded individual or entity.
The OIG may exclude any health care entity (such as a hospital or clinical
laboratory) if an excluded individual has a direct or indirect ownership or
control interest of 5 percent or more in it, or is an officer, director, agent,
or managing employee of that entity. This is true whether or not the excluded
persons are compensated for their services. Violating this prohibition could
result in criminal prosecution by the Department of Justice, and/or the
imposition of civil monetary penalties against the excluded individual/entity or
the employer by the OIG. (Note: Emergency items or services, under certain
conditions, may be paid for by Medicare.
The exclusion notice to the subject defines the effect of' the exclusion and
the subject's appeal rights. If the exclusion was taken under the Civil
Monetary Penalty Law authorities or because of kickback violations, the excluded
party may request a hearing before an Administrative Law Judge (ALJ) and receive
a decision before the OIG implements the exclusion. In all other cases, the
exclusion is in effect while awaiting the hearing and its outcome. Appeals of
ALJ decisions are decided by the Departmental Appeals Board. The subject may
then appeal the administrative decision to the district court. Very
significantly, less than 0.34 percent of all OIG-implemented exclusions have
been reversed on appeal.
The OIG is required to give government-wide effect to all exclusions it
imposes. The Federal Acquisition Streamlining Act of 1994 mandates and expands
the government-wide effect of all debarments, suspensions, and other
exclusionary actions to Federal procurement, as well as non-procurement
programs. Thus, all OIG imposed exclusions must be effectuated not only for
all Departmental programs, but also for all other Executive Branch procurement
and non- procurement programs and activities. This means, for example, that a
health care provider excluded from Medicare, Medicaid, and other State health
care programs will be unable to continue participating in the Civilian Health
and Medical Program of the Uniformed Services (CHAMPUS) program administered by
the Department of Defense or in the Federal Employee Health Benefits Program
administered by the Office of Personnel Management.
Reinstatement to the Programs
Reinstatement to Medicare, Medicaid, and the other State health care
programs is not an automatic process. The exclusion notice issued to a health
care provider specifies that, at the conclusion of the period of exclusion, the
provider has the right to apply for reinstatement under the provisions of the
statute and the regulations.
The OIG will terminate an exclusion and reinstate the provider only if we
determine that, during the period of exclusion, the subject has not committed an
act for which a civil monetary penalty could be assessed or has not committed an
act which would result in an additional exclusion be imposed.
Further, the OIG must determine that there are reasonable assurances that
the types of actions which caused the original exclusion have not and will not
If the OIG determines that the subject's request for Medicare reinstatement
should be approved, we notify the subject and other appropriate parties
including the Health Care Financing Administration, Medicare contractors, and
the State agencies. The State health care programs may reinstate the subject
into their programs upon receipt of the notice from the OIG, unless
reinstatement is not available under State law or the State health care program
had established a longer period of exclusion under its own authorities and