Funds for the HCFAC program are appropriated from the trust fund to an  expenditure account, referred to as the Health Care Fraud and Abuse  Control Account (control account) maintained within the trust fund. As shown in  figure 1, these deposits primarily consisted of penalties and multiple  damages and criminal fines collected as a result of health care fraud  cases. Also, DOJ did not record some expenditure data in its accounting  system as HCFAC expenses and therefore could not provide an electronic  file of all nonpayroll expenses from which we could select a statistical  sample of these fiscal year 2003 expenses. Reported Amounts Appropriated from the Trust Fund for HCFAC and General Uses of the Funds Were Consistent with HIPAA

HIPAA specifies the maximum amounts that may be appropriated from the  trust fund each year for HCFAC, as well as a minimum and maximum  amount of the appropriations that must go to the HHS/OIG for Medicare  and Medicaid antifraud activities. In June 2003, OI upgraded its workload tracking system to record hours  for all staff. Some Reported Cost Savings Are Related to Trust Fund Expenditures for HCFAC, but Most Are Not

For the first time, some of the reported cost savings can be considered  savings to the trust fund, resulting from trust fund expenditures for the  HCFAC program. Of these  amounts, about $1.5 billion in cost savings for fiscal year 2002 and   $3.9 billion for fiscal year 2003 resulted from actions taken since the  HCFAC program was created. However, the remaining cost savings   ($18.4 billion for fiscal year 2002 and $16.9 billion for fiscal year 2003)  continued to be related to actions that predate the HCFAC program and  cannot be associated with expenditures from the trust fund for HCFAC  activities. Repeated Delays in Issuing the HHS and DOJ Joint HCFAC Reports Impact Relevance of Data

HIPAA requires that HHS and DOJ issue a joint report on the HCFAC  program for each fiscal year by January 1 of the following calendar year. However, beginning with the  report for fiscal year 2001 the report has been issued late and the length of  the delay has increased each year. DOJ also commented on the status of two remaining open  recommendations from our prior report. To assess the reliability of information reported by HHS and DOJ in the  joint HCFAC reports for fiscal years 2002 and 2003 as appropriations from  the trust fund for HCFAC, we    obtained and reviewed the HIPAA legislation, which includes the  maximum and minimum amounts that can be appropriated from the trust  fund for HCFAC;   obtained and reviewed the HCFAC funding requests for the HHS and DOJ  components to determine whether activities included in the requests were  consistent with the stated purposes of the HIPAA legislation;   obtained the funding decision memorandum detailing how the funds  would be distributed between HHS and DOJ, and obtained related  documentation for fiscal years 2002 and 2003 to verify the HCFAC funds  certified by HHS and DOJ officials; and   compared amounts reported in the joint HCFAC reports to the approved  funding decision memorandum and compared amounts from the decision  memorandum to the OMB documentation (Apportionment Schedule   SF-132) to verify that the amounts were made available. To assess the reliability of information reported by HHS and DOJ in the  joint HCFAC reports for fiscal years 2002 and 2003 as cost savings, we    obtained the schedule of HHS/OIG Cost Savings 1998-2011 and compared  the data for fiscal years 2002 and 2003 to the HCFAC joint reports;   obtained the fiscal years 2002 and 2003 HHS/OIG semiannual reports and  traced and compared the amounts identified as cost savings to the  amounts reported in the fiscal years 2002 and 2003 HCFAC joint reports;   selected cost saving transactions on a nonstatistical basis, traced and  compared the data to supporting documentation; and  reviewed the dates of reports that the OIG cited as having findings and  recommendations that resulted in the reported cost savings. Medicare: Reporting on the Health Care Fraud and Abuse Control  Program for Fiscal Years 1998 and 1999.
Why GAO Did This Study

Because of the susceptibility of health care programs to fraud and abuse, Congress enacted the Health Care Fraud and Abuse Control (HCFAC) program as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Pub. L. No. 104-191. HIPAA requires that the Departments of Health and Human Services (HHS) and Justice (DOJ) issue a joint annual report to Congress on amounts deposited to the Federal Hospital Insurance Trust Fund and amounts appropriated from the trust fund for the HCFAC program. It also requires GAO to submit reports biennially. This, our final report required by law, provides the results of our review of amounts reported as (1) deposits to the trust fund, (2) appropriations from the trust fund and justification for expenditure of such amounts by HHS and DOJ, and (3) savings resulting from expenditures from the trust fund. We also report on the repeated late issuance of the annual HCFAC report as well as the status of our prior recommendations.

What GAO Found

Our review of the HCFAC program for fiscal years 2002 and 2003 determined that amounts reported as trust fund deposits--$766 million (fiscal year 2002) and $243 million (fiscal year 2003)--were appropriate. The sources of these deposits were primarily penalties and multiple damages and criminal fines collected from health care fraud cases. Amounts reported as appropriations from the trust fund for HCFAC activities--$209 million (fiscal year 2002) and $240 million (fiscal year 2003)--were consistent with HIPAA. The HHS/OIG received funds within the minimum and maximum amounts allowed by HIPAA to carry out Medicare and Medicaid antifraud activities. The expenditures charged against HCFAC funds by HHS and DOJ for fiscal years 2002 and 2003 were reasonable but the HHS/OIG did not record time charges in its workload systems for all staff that worked on HCFAC activities. Also, DOJ did not record all fiscal year 2003 expenditures in its accounting system so they could be readily identified as HCFAC related. Failure to properly record staff hours and expenditure data could hinder DOJ and HHS in monitoring the uses of HCFAC funds. Some reported cost savings--$19.9 billion (fiscal year 2002) and $20.8 billion (fiscal year 2003) can be considered savings to the trust fund, resulting from trust fund expenditures for the HCFAC program, but most can not. For example, $1.5 billion of the cost savings for fiscal year 2002 and $3.9 billion for fiscal year 2003 are the result of HHS/OIG recommendations and other initiatives since the HCFAC program was created. However, the remaining cost savings continued to be largely the result of actions that predate the HCFAC program and cannot be associated with expenditures from the trust fund for HCFAC. HIPAA requires that HHS and DOJ issue to Congress a joint HCFAC report on January 1 of each year. However, DOJ and HHS have issued the last three reports late and the length of the delay has increased each year. HHS and DOJ cited onerous internal review processes as the reason for late issuance.