Enforcement Actions Against Fiscal Intermediaries and Carriers
 
September 1, 1999
 

Health care providers and suppliers are being joined under the federal investigative spotlight by fiscal intermediaries and carriers under contract with the Health Care Financing Administrator.

George F. Grob, HHS OIG Deputy Inspector General for Evaluation and Inspections, testified before the House Commerce Committee on July 14th regarding "serious problems with the contractors who carry out most of the day-to-day operations of the Medicare program . . . . Unfortunately, we have found weaknesses and vulnerabilities in these operations. For some, we have even found problems with their own integrity, resulting in civil and criminal violations."

Grob observed that Medicare serviced 39 million Americans at an estimated cost of $217 billion in 1999, with daily operations administered through 64 contractors that will be paid approximately $1.8 billion in fiscal year 1999. He noted that the most troubling aspect of the OIG's review of contractor operations "has to do with [their] own integrity - misusing government funds and actively trying to conceal their actions, altering documents and falsifying statements that specific work was performed." OIG investigations of contractors have to date resulted in nine civil settlements and two criminal convictions, with 21 former or current contractors actively under investigation. Completed investigations include the following financial recoveries: Health Care Service Corporation (carrier for Illinois and Michigan) with a $140 million civil recovery and a $4 million criminal fine; XACT Medicare Services of Pennsylvania with a $38.5 million civil recovery; Blue Shield of California with a $12 million civil recovery ($2.16 to qui tam relator) and a $1.5 criminal fine; Blue Cross Blue Shield of Michigan with a $27.6 million qui tam settlement plus a $13 million reimbursement for costs of HCFA audit plus $24 million for violating Medicare secondary payor rules.