Under the joint direction of the Attorney General and the HHS Secretary (acting through the HHS/OIG), HCFAC is to achieve the following: coordinate federal, state, and local law enforcement efforts to control fraud and abuse associated with health plans; conduct investigations, audits, and other studies of the delivery and payment for health care in the United States; facilitate the enforcement of the civil, criminal, and administrative statutes applicable to health care; provide guidance to the health care industry, including the issuance of advisory opinions, safe harbor notices, and special fraud alerts; and establish a national database of adverse actions against health care providers. HIPAA also requires amounts equal to the following types of collections to be deposited in the trust fund: criminal fines recovered in cases involving a federal health care offense, including collections pursuant to section 1347 of Title 18, United States Code, civil monetary penalties and assessments imposed in health care fraud amounts resulting from the forfeiture of property by reason of a federal health care offense, including collections under section 982(a)(6) of Title 18, United States Code, and penalties and damages obtained and otherwise creditable to miscellaneous receipts of the Treasury’s general fund obtained under the False Claims Act (sections 3729 through 3733 of Title 31, United States Code), in cases involving claims related to the provision of health care items and services (other than funds awarded to a relator, for restitution or otherwise authorized by law). To satisfy our second objective of identifying amounts appropriated from the trust fund in fiscal year 1997 for the HCFAC program and the reported justification for expenditures of such amounts, as well as our third objective of identifying expenditures from the trust fund for HCFAC activities not related to Medicare, we reviewed the joint report. To identify any savings to the trust fund, as well as any other savings, resulting from expenditures from the trust fund for the HCFAC program, which was our fourth objective, we reviewed the joint report. Amounts Deposited to the Trust Fund

HHS and DOJ reported total deposits of $130.7 million to the trust fund in fiscal year 1997 pursuant to HIPAA. In addition, nothing came to our attention to suggest that HHS and DOJ did not accurately classify HIPAA deposits in their fiscal year 1997 joint HCFAC report, except for a $5 million overstatement of criminal fines that they noted in the joint report. We found no material weaknesses in HHS’ and DOJ’s process for allocating the HCFAC appropriation for fraud and abuse control purposes. The Department of Justice was allocated a total of $22.2 million primarily to increase efforts to litigate health care fraud cases and provide fraud training courses. The HCFA Customer Information System is designed to identify potential targets for Medicare fraud and abuse investigations. HRSA was allocated $2 million to design and implement the adverse action database, referred to as the Healthcare Integrity and Protection Data Bank (which is discussed later in this report). We found that (1) the expenditures and obligations we tested related to HHS and DOJ funding decisions and the proposals approved for HCFAC funds and (2) the transactions appeared justified for fraud and abuse activities. Non-Medicare Expenditures

We were not able to identify HCFAC program expenditures from the trust fund not related to Medicare because the HHS/OIG and DOJ do not separately account for or monitor such expenditures. HIPAA restricts the HHS/OIG’s use of HCFAC funds to the Medicare and Medicaid programs. Savings to the Trust Fund

In this first year of the HCFAC program, we were unable to quantify the savings to the trust fund, or any other savings, resulting from expenditures from the trust fund due to the nature of health care anti-fraud and -abuse activities. GAO’s Comments

1.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the first joint report issued by the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) on the fiscal year (FY) 1997 deposits to the Federal Hospital Insurance Trust Fund and the allocation of the Health Care Fraud and Abuse Control Program (HCFAC) appropriation, focusing on: (1) the amounts deposited to the trust fund and the sources of such amounts; (2) the amounts appropriated from the trust fund for the HCFAC program and the justification for the expenditure of such amounts; (3) expenditures from the trust fund for HCFAC activities not related to Medicare; and (4) any savings to the trust fund, as well as any other savings, resulting from the trust fund for the HCFAC program.

What GAO Found

GAO noted that: (1) the HHS and DOJ joint report for FY 1997 reported that $130.7 million was deposited to the trust fund pursuant to the Health Insurance Portablity and Accountability Act (HIPAA); (2) the sources of these deposits were primarily penalties and damages and criminal fines resulting from health care fraud audits, evaluations, investigations, and litigation activities initiated prior to implementation of the HCFAC program; (3) the joint report also stated that $104 million was appropriated from the trust fund for the HCFAC program in FY 1997; (4) of the $104 million, HHS and DOJ allocated the maximum--$70 million--to thhe HHS Office of Inspector General (OIG) to increase its Medicare and Medicaid fraud activities; (5) the remaining $34 million was allocated to: (a) DOJ, which received $22.2 million primarily to increase litigative efforts and to provide fraud training; (b) the Health Care Financing Administration (HCFA), which received $5.3 million for various initiatives related to health care fraud and abuse, including the development of a new information system to identify potential targets for fraud investigations; and (c) other federal and state agencies, which received the remaining $6.5 million for a variety of activities, including increased litigation; development of a new adverse action data bank; and outreach, education and training; (6) GAO found no material weaknesses in HHS' and DOJ's processes for accumulating this information, and nothing came to GAO's attention to lead it to believe that the amounts related to HIPAA deposits and the allocation of the HCFAC appropriation reported by HHS and DOJ in their joint report were inaccurate or unsupported; (7) GAO could not identify expenditures from the trust fund for HCFAC activities not related to Medicare because neither HHS OIG nor DOJ separately account for or monitor those expenditures; (8) HIPAA restricts HHS OIG's use of HCFAC funds to Medicare and Medicaid activities; (9) furthermore, health care fraud cases often involve more than one health care program; (10) thus, it is difficult to identify non-Medicare related expenditures; (11) GAO also could not determine the magnitude of savings to the trust fund, or other savings, resulting from trust fund expenditures for the HCFAC program during FY 1997; and (12) finally, the implementation of the Healthcare Integrity and Protection Data Bank, which is to be an important tool to keep unscrupulous providers from having access to Medicare and other health care programs, has been delayed.