Health & Human Services: Fraud or Scam Report

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OIG posts two reports, corporate integrity agreement addendum, an advisory opinion and enforcement actions

OIG posts two reports, corporate integrity agreement addendum, an advisory opinion and enforcement actions. As always, you can use the links provided to go directly to the new material.


National Government Services, Inc., Made Medicare Payments for Diabetic Test Strips When Beneficiaries Had Not Nearly Exhausted Previously Dispensed Supplies (A-09-15-02001)

National Government Services, Inc. (NGS), the durable medical equipment Medicare administrative contractor for Jurisdiction B, made payments for calendar year 2013 to suppliers that dispensed diabetic test strips when the beneficiaries had not nearly exhausted test strips previously dispensed by different suppliers. On the basis of our sample results, we estimated that $3.2 million of the $4.4 million that NGS paid to suppliers may have been unallowable for Medicare reimbursement.

Medicare Compliance Review of Sierra View Medical Center (A-09-14-02039)

Sierra View Medical Center (the Medical Center), located in Porterville, California, complied with Medicare billing requirements for 5 of the 30 inpatient and outpatient claims we reviewed. However, the Medical Center did not fully comply with Medicare billing requirements for the remaining 25 claims, resulting in overpayments of approximately $798,000. These overpayments occurred primarily because the Medical Center did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.

Corporate Integrity Agreement

  • Updated Corporate Integrity Agreement List: Novartis Pharmaceuticals Corporation (Addendum)

Advisory Opinion

  • Advisory Opinion 15-14 (regarding a non-profit, tax-exempt, charitable organization’s program to help financially needy patients, including Medicare and Medicaid beneficiaries, obtain magnetic resonance imaging for the diagnosis or ongoing evaluation of [disease state redacted] (the “Arrangement”).)

Enforcement Actions

  • Manhattan U.S. Attorney Announces $370 Million Civil Fraud Settlement Against Novartis Pharmaceuticals For Kickback Scheme Involving High-Priced Prescription Drugs, Along With $20 Million Forfeiture Of Proceeds From The Scheme (November 20, 2015; U.S. Attorney; Southern District of New York)
  • Owner of Houston Durable Medical Equipment Health Care Companies Sentenced for $3.4 Million Medicare Fraud Scheme (November 20, 2015; U.S. Department of Justice)
  • Three Indicted In Medical Equipment Kickback Scheme (November 20, 2015; U.S. Attorney; Middle District of Tennessee)
  • Former Business Executive Indicted for Failing to Pay More than $250,000 in Child Support Obligations (November 20, 2015; U.S. Attorney; District of Rhode Island)
  • State Enforcement Actions Updated

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OIG posts a report, child support enforcement profile, and CIA

OIG posts a corporate integrity agreement, a child support enforcement profile, and a report. As always, you can links provided to go directly to the new material.

Corporate Integrity Agreement

  • Added to CIA List: Aventis, Inc, Sanofi US Services, Inc., Sanofi-Aventis, US LLC and Genzyme Corporation

Child Support Enforcement


Part B Payments for 340B Purchased Drugs (OEI-12-14-00030)

Why We Did This Study

Medicare Part B pays a set amount to health care providers who furnish drugs to its beneficiaries. Certain eligible health care providers-generally, those that serve a disproportionate share of needy patients-are allowed to purchase drugs using the 340B Drug Discount Program, thereby receiving sizable statutory discounts. Past Office of Inspector General (OIG) work found that Medicare payments to providers for 340B purchased drugs substantially exceeded the providers’ costs. Under the design of the 340B Program and Part B payment rules, the difference between what Medicare pays and what it costs to acquire the drugs is fully retained by the participating covered entities, allowing them to stretch scarce Federal dollars in service to their communities. However, some policymakers have questioned whether a portion of the savings mandated through the 340B Program should be passed on to Medicare and its beneficiaries.

How We Did This Study

We determined how much Part B spent on 340B-purchased drugs in 2013 by identifying paid Medicare claims from covered entities. We compared 2013 Part B payment amounts to 340B ceiling prices at the individual drug level and the aggregate level. We also analyzed the financial impact on covered entities, the Medicare program, and Medicare beneficiaries of three different shared-savings arrangements that would enable Medicare and its beneficiaries to share in the cost savings resulting from 340B discounts.

What We Found

Medicare Part B and its beneficiaries paid $3.5 billion for 340B-purchased drugs in 2013. In the aggregate, Part B payment amounts were 58 percent more than the statutorily based 340B ceiling prices that year, which allowed covered entities to retain approximately $1.3 billion. The 340B statute does not restrict how covered entities may use these funds. The three shared-savings arrangements described in this report would have resulted in Medicare Part B savings of $162 million to $1.1 billion in 2013 while still providing covered entities with incentives to purchase those drugs through the 340B Program.

What We Conclude

OIG has produced an extensive body of work examining the 340B Program from various angles. As stakeholders debate the nature of 340B discounts and whether statutory changes should be made to enable Medicare and/or Medicaid to share in these savings, this report presents an independent analysis to inform the ongoing discussion and to support congressional and Administration decisionmakers’ efforts in striking a balance among the needs of these vital programs.

If we can be of any further assistance, please send an email to .

OIG’s privacy policy can be found at


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