Department of Health and Human Services
OFFICE OF
INSPECTOR GENERAL

MEDICARE IMPROPERLY PAID
PROVIDERS MILLIONS OF DOLLARS
FOR UNLAWFULLY PRESENT
BENEFICIARIES WHO RECEIVED
SERVICES DURING
2009 THROUGH 2011

Inquiries about this report may be addressed to the Office of Public Affairs at
Public.Affairs@oig.hhs.gov.

Daniel R. Levinson
Inspector General
January 2013
A-07-12-01116

Office of Inspector General
https://oig.hhs.gov/

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as amended, is
to protect the integrity of the Department of Health and Human Services (HHS) programs, as well as the
health and welfare of beneficiaries served by those programs. This statutory mission is carried out
through a nationwide network of audits, investigations, and inspections conducted by the following
operating components:

Office of Audit Services
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting audits with
its own audit resources or by overseeing audit work done by others. Audits examine the performance of
HHS programs and/or its grantees and contractors in carrying out their respective responsibilities and are
intended to provide independent assessments of HHS programs and operations. These assessments help
reduce waste, abuse, and mismanagement and promote economy and efficiency throughout HHS.

Office of Evaluation and Inspections
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide HHS, Congress,
and the public with timely, useful, and reliable information on significant issues. These evaluations focus
on preventing fraud, waste, or abuse and promoting economy, efficiency, and effectiveness of
departmental programs. To promote impact, OEI reports also present practical recommendations for
improving program operations.

Office of Investigations
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations of fraud and
misconduct related to HHS programs, operations, and beneficiaries. With investigators working in all 50
States and the District of Columbia, OI utilizes its resources by actively coordinating with the Department
of Justice and other Federal, State, and local law enforcement authorities. The investigative efforts of OI
often lead to criminal convictions, administrative sanctions, and/or civil monetary penalties.

Office of Counsel to the Inspector General
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, rendering
advice and opinions on HHS programs and operations and providing all legal support for OIG’s internal
operations. OCIG represents OIG in all civil and administrative fraud and abuse cases involving HHS
programs, including False Claims Act, program exclusion, and civil monetary penalty cases. In
connection with these cases, OCIG also negotiates and monitors corporate integrity agreements. OCIG
renders advisory opinions, issues compliance program guidance, publishes fraud alerts, and provides
other guidance to the health care industry concerning the anti-kickback statute and other OIG enforcement
authorities.

Notices

THIS REPORT IS AVAILABLE TO THE PUBLIC
at https://oig.hhs.gov
Section 8L of the Inspector General Act, 5 U.S.C. App., requires
that OIG post its publicly available reports on the OIG Web site.

OFFICE OF AUDIT SERVICES FINDINGS AND OPINIONS
The designation of financial or management practices as
questionable, a recommendation for the disallowance of costs
incurred or claimed, and any other conclusions and
recommendations in this report represent the findings and
opinions of OAS. Authorized officials of the HHS operating
divisions will make final determination on these matters.

EXECUTIVE SUMMARY
BACKGROUND
Pursuant to Title XVIII of the Social Security Act, the Medicare program provides health
insurance for people aged 65 and over, people with disabilities, and people with permanent
kidney disease. The Centers for Medicare & Medicaid Services (CMS), which administers the
program, contracts with Medicare contractors to process and pay Medicare Part A and Part B
claims submitted by health care providers.
Under Federal requirements, Medicare does not pay for services rendered to an alien beneficiary
who was not lawfully present in the United States (unlawfully present) on the date of service.
The Social Security Administration (SSA) is CMS’s primary source of information about
unlawfully present beneficiaries. SSA collects information from Federal agencies, including the
Department of Homeland Security, and transmits these data to CMS. With this information,
CMS determines which beneficiaries are unlawfully present and the periods for which Medicare
will not pay for health care services provided to these individuals.
CMS’s records identified 29,185 beneficiaries who had been unlawfully present at some point
during calendar years (CY) 2009 through 2011. We limited our review to 133,541 claims on
behalf of 2,575 unlawfully present beneficiaries with $91,620,548 in associated Medicare
payments.
OBJECTIVE
Our objective was to determine whether CMS had adequate controls to prevent and detect
improper payments for Medicare services rendered to unlawfully present beneficiaries.
SUMMARY OF FINDINGS
When CMS’s data systems indicated at the time that a claim was processed that a beneficiary
was unlawfully present, CMS’s controls were adequate to prevent payment for Medicare
services. Specifically, CMS had a prepayment edit that flagged claims so that Medicare
contractors could deny payments to providers when the unlawful presence dates and the dates of
service on the claims overlapped.
When CMS’s data systems did not indicate until after a claim had been processed that a
beneficiary was unlawfully present, CMS’s controls were not adequate to detect and recoup the
improper payment. Because CMS did not always receive information relating to unlawful
presence in a timely manner, Medicare payments totaling $91,620,548 were made to providers
for services rendered to 2,575 unlawfully present beneficiaries during CYs 2009 through 2011.
CMS did not have policies and procedures to review unlawful presence information on a
postpayment basis that would have detected improper payments that the prepayment edit could
not prevent. Consequently, CMS did not notify the Medicare contractors to recoup any of the
$91,620,548 in improper payments.

i

RECOMMENDATIONS
We recommend that CMS:
•

ensure that Medicare contractors recoup the $91,620,548 in improper payments,

•

implement policies and procedures to detect and recoup improper payments made for
Medicare services rendered to unlawfully present beneficiaries in cases when information
relating to unlawful presence is received on previously paid Medicare claims, and

•

identify improper payments made on behalf of unlawfully present beneficiaries after our
audit period but before implementation of policies and procedures and ensure that
Medicare contractors recoup those payments.

CENTERS FOR MEDICARE & MEDICAID SERVICES COMMENTS AND
OFFICE OF INSPECTOR GENERAL RESPONSE
In written comments on our draft report, CMS concurred with our last two recommendations and
stated that in April 2013 it plans to implement a process for detecting and recouping improper
payments for previously paid Medicare claims. CMS partially concurred with our
recommendation regarding the recoupment of the $91,620,548 in improper payments. CMS
stated that it is committed to recovering overpayments we identified, but it must take into
account the cost benefit of recoupment activities, including potential appeal costs and the cost of
manually reopening these claims.
After providing its comments, CMS advised us that it had initiated recovery actions for CY 2009
claims and that it would shortly begin to recoup improper payments for CY 2010 and 2011
claims as well. We acknowledge that CMS must take into account the cost benefit for
recoupment activities. We encourage CMS to continue to recover these improper payments in
accordance with its policies and procedures.

ii

TABLE OF CONTENTS
Page
INTRODUCTION........................................................................................................................1
BACKGROUND ...................................................................................................................1
Medicare Program .........................................................................................................1
Medicare Payments on Behalf of Beneficiaries Who Are Not Lawfully Present
in the United States ...................................................................................................1
Obtaining Information for Unlawfully Present Beneficiaries ........................................1
OBJECTIVE, SCOPE, AND METHODOLOGY .................................................................2
Objective ........................................................................................................................2
Scope ..............................................................................................................................2
Methodology ..................................................................................................................2
FINDINGS AND RECOMMENDATIONS ..............................................................................3
WHEN THE CENTERS FOR MEDICARE & MEDICAID SERVICES
RECEIVED INFORMATION RELATING TO UNLAWFUL PRESENCE
BEFORE CLAIMS WERE PAID, IT HAD CONTROLS TO PREVENT
IMPROPER PAYMENTS ................................................................................................3
WHEN THE CENTERS FOR MEDICARE & MEDICAID SERVICES
RECEIVED INFORMATION RELATING TO UNLAWFUL PRESENCE
AFTER CLAIMS WERE PAID, IT DID NOT HAVE CONTROLS TO DETECT
AND RECOUP IMPROPER PAYMENTS......................................................................3
Federal Requirements ....................................................................................................3
Improper Payments Not Detected ..................................................................................4
The Centers for Medicare & Medicaid Services Did Not Have
Policies and Procedures To Detect and Recoup Improper Payments
on a Postpayment Basis ............................................................................................5
Improper Payments on Behalf of Unlawfully Present Beneficiaries
Remained Uncollected ..............................................................................................5
RECOMMENDATIONS .......................................................................................................6
CENTERS FOR MEDICARE & MEDICAID SERVICES COMMENTS AND
OFFICE OF INSPECTOR GENERAL RESPONSE .........................................................6
Recoupment of Improper Payments...............................................................................7
Provider Access to Unlawful Presence Information ......................................................7
APPENDIX
CENTERS FOR MEDICARE & MEDICAID SERVICES COMMENTS
iii

INTRODUCTION
BACKGROUND
Medicare Program
Pursuant to Title XVIII of the Social Security Act (the Act), the Medicare program provides
health insurance for people aged 65 and over, people with disabilities, and people with
permanent kidney disease. The Centers for Medicare & Medicaid Services (CMS) administers
the program. Medicare Part A provides inpatient hospital insurance benefits and coverage of
extended care services for patients after hospital discharge. Medicare Part B provides
supplementary medical insurance for medical and other health services, including coverage of
hospital outpatient services. CMS contracts with Medicare contractors to, among other things,
process and pay claims submitted by hospitals, physicians, and suppliers. For this report, we
refer to all Medicare Part A and Part B entities or individuals receiving Medicare payments as
“providers.”
Medicare Payments on Behalf of Beneficiaries Who Are Not Lawfully Present
in the United States
Medicare benefits are generally allowable when rendered to a beneficiary for whom the Social
Security Administration (SSA) has evidence in its records that the beneficiary is a U.S. citizen or
a U.S. national.
Pursuant to sections 202, 226, 226A, 1818, and 1818A of the Act, Medicare payments are also
allowable for services furnished to an alien who is lawfully present in the United States.
Pursuant to 8 U.S.C. § 1611, 1 Medicare benefits are not allowable for aliens who are not lawfully
present in the United States as determined by the Attorney General. 2 For this report, we refer to
these individuals as “unlawfully present.”
Obtaining Information for Unlawfully Present Beneficiaries
SSA is CMS’s primary source of information about unlawfully present beneficiaries. SSA
collects the names of Medicare beneficiaries who lose their status of being lawfully present in
the United States from the Department of Homeland Security and other Federal agencies. For
these individuals, SSA also collects the dates on which their lawful presence status ended and, in
some instances, restarted. When SSA’s information indicates that a beneficiary’s lawful
presence has ended, CMS classifies the individual as unlawfully present for Medicare purposes.
The end date of lawful presence as indicated by SSA’s systems becomes the start date on which
these individuals are not eligible to receive Medicare benefits.
1

Enacted by the Personal Responsibility and Work Opportunity Act of 1996, P.L. No. 104-193 § 401, as amended
by the Balanced Budget Act of 1997, P.L. No. 105-33 § 5561.

2

The Attorney General defined the phrase “lawfully present in the United States” in regulations published on
September 6, 1996, by the Immigration and Naturalization Service (now part of the Department of Homeland
Security). This regulation identifies five broad categories of lawfully present aliens, including “qualified aliens” as
defined in 8 U.S.C. § 1641(b).

1

CMS’s Enrollment Database (EDB) interfaces with SSA’s data systems to identify and classify
individuals as unlawfully present. CMS officials stated that the systems generally make these
classifications on the same day that CMS receives the information from SSA. The dates of
unlawful presence are then accessible by several applications, including CMS’s Common
Working File (CWF). The Medicare contractors use the CWF to process Medicare Part A and
Part B claims from providers.
OBJECTIVE, SCOPE, AND METHODOLOGY
Objective
Our objective was to determine whether CMS had adequate controls to prevent and detect
improper payments for Medicare services rendered to unlawfully present beneficiaries.
Scope
We identified 133,541 claims for which CMS’s data systems indicated that Medicare contractors
made $91,620,548 in payments to providers on behalf of unlawfully present beneficiaries who
received services in calendar years (CY) 2009 through 2011.
We limited our review of CMS’s internal controls to those that directly related to our objective.
We performed fieldwork from January through June 2012.
Methodology
To accomplish our objective, we performed the following steps:
•

We reviewed applicable Federal laws, regulations, and guidance.

•

We held discussions with CMS officials, Medicare contractors, and providers to gain an
understanding of how Medicare claims for unlawfully present beneficiaries are
processed.

•

We used data from CMS’s EDB (as of March 28, 2012) to identify 29,185 beneficiaries
who had been unlawfully present at some point during CYs 2009 through 2011. Our
comparison to CMS’s National Claims History file (as of March 31, 2012) showed that
Medicare contractors paid 133,541 claims (on behalf of 2,575 beneficiaries with
$91,620,548 in associated payments) for which the unlawful presence dates overlapped
with the dates of service.

•

We judgmentally selected 160 inpatient claims and, for those claims, compared the dates
on which CMS’s data systems were updated with information relating to unlawful
presence from SSA to the dates on which Medicare contractors paid providers.

•

We discussed the results of our review with CMS officials on September 12, 2012.
2

We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable basis
for our findings and conclusions based on our audit objective.
FINDINGS AND RECOMMENDATIONS
When CMS’s data systems indicated at the time that a claim was processed that a beneficiary
was unlawfully present, CMS’s controls were adequate to prevent payment for Medicare
services. Specifically, CMS had a prepayment edit that flagged claims so that Medicare
contractors could deny payments to providers when the unlawful presence dates and the dates of
service on the claims overlapped.
When CMS’s data systems did not indicate until after a claim had been processed that a
beneficiary was unlawfully present, CMS’s controls were not adequate to detect and recoup the
improper payment. Because CMS did not always receive information relating to unlawful
presence in a timely manner, Medicare payments totaling $91,620,548 were made to providers
for services rendered to 2,575 unlawfully present beneficiaries during CYs 2009 through 2011.
CMS did not have policies and procedures to review unlawful presence information on a
postpayment basis that would have detected improper payments that the prepayment edit could
not prevent. Consequently, CMS did not notify the Medicare contractors to recoup any of the
$91,620,548 in improper payments.
WHEN THE CENTERS FOR MEDICARE & MEDICAID SERVICES
RECEIVED INFORMATION RELATING TO UNLAWFUL PRESENCE
BEFORE CLAIMS WERE PAID, IT HAD CONTROLS TO PREVENT
IMPROPER PAYMENTS
When CMS’s data systems indicated at the time that a claim was processed that a beneficiary
was unlawfully present, CMS’s controls, particularly its prepayment edit, were adequate to
prevent payment for Medicare services rendered to unlawfully present beneficiaries. Further, in
May 2010, CMS significantly improved its coordination with SSA to classify beneficiaries as
unlawfully present.
WHEN THE CENTERS FOR MEDICARE & MEDICAID SERVICES
RECEIVED INFORMATION RELATING TO UNLAWFUL PRESENCE
AFTER CLAIMS WERE PAID, IT DID NOT HAVE CONTROLS TO DETECT
AND RECOUP IMPROPER PAYMENTS
Federal Requirements
According to 8 U.S.C. § 1611, Medicare benefits will not be payable to any alien in the United
States for any month during which the alien is not lawfully present in the United States as
determined by the Attorney General.

3

Chapter 1, section 10.1.4.8, of CMS’s Medicare Claims Processing Manual states:
Medicare payment may not be made for items and services furnished to an alien
beneficiary who was not lawfully present in the United States on the date of
service. [Emphasis added.]
The CWF must establish an auxiliary file based on enrollment data contained in
the Enrollment Data Base … in order to appropriately edit the claims specifically
associated with alien beneficiaries. The auxiliary file will be the basis for an edit
that rejects claims for a beneficiary that was not lawfully present in the U.S. on
the date of service. [Medicare contractors] must deny claims for items and
services, rejected by CWF on the basis that the beneficiary was not lawfully
present in the U.S. on the date of service.
The Presidential memorandum entitled Finding and Recapturing Improper Payments (75 Fed.
Reg. 12119 (March 15, 2010)) directs Federal agencies, including CMS, to use every tool
available to identify and reclaim the funds associated with improper payments that the Federal
Government has made. The memorandum notes that reclaiming these funds is a critical
component of the proper stewardship and protection of taxpayer dollars. Office of
Management and Budget Circular A-123, Requirements for Effective Measurement and
Remediation of Improper Payments, also states that Federal agencies should take all necessary
steps to prevent, detect, and collect improper payments (Appendix C, part I, section L (2006)).
Improper Payments Not Detected
When CMS’s data systems did not indicate until after a claim had been processed that a
beneficiary was unlawfully present, CMS’s controls were not adequate to detect and recoup the
improper payment.
CMS received information on dates of unlawful presence after the starting date of unlawful
presence. (In one instance, CMS did not receive this information until 1 year after the
beneficiary became unlawfully present.) As a result, Medicare contractors received and
processed claims from providers before CMS received notification of the beneficiaries’ unlawful
presence. Contractors incorrectly but unknowingly paid providers for services rendered to
unlawfully present beneficiaries. As a result, Medicare payments totaling $91,620,548 were
improperly made to providers for services provided to 2,575 unlawfully present beneficiaries
during CYs 2009 through 2011.
CMS does not always receive timely updates regarding unlawful presence information before
Medicare contractors pay providers on behalf of unlawfully present beneficiaries. When CMS
received untimely information indicating that the beneficiaries’ periods of unlawful presence
overlapped with the dates of service on previously paid Medicare claims, CMS did not notify
contractors of this updated information. In the absence of such notification, the contractors did
not detect and recoup the improper payments.

4

For the 160 claims that we reviewed, we compared the dates on which CMS’s data systems
were updated with unlawful presence information from SSA to the dates on which Medicare
contractors paid providers. For each of the 160 claims, we determined that CMS received the
information from SSA after the contractors had paid the claims.
A Medicare contractor confirmed to us that CMS had not notified it of the beneficiaries’ dates of
unlawful presence for this type of claim and explained that it made the payments because the
information in CMS’s data systems at the time of payment did not indicate that the beneficiaries
were unlawfully present. After analyzing information from us regarding the beneficiaries’
unlawful presence statuses, the contractor stated that claims of this type were not allowable for
Medicare payment. The contractor stated that it would have retroactively reprocessed such
claims and recouped the payments if CMS had notified it of the unlawful presence information.
The Centers for Medicare & Medicaid Services Did Not Have
Policies and Procedures To Detect and Recoup Improper Payments
on a Postpayment Basis
The improper payments remained uncollected because CMS did not have policies and
procedures to review unlawful presence information on a postpayment basis to detect improper
payments that the prepayment edit could not prevent.
Because CMS has instructed its Medicare contractors to rely on the information that CMS
receives from SSA to prevent improper payments and because this information must be present
for the prepayment edit to be effective, using the same information to notify contractors of
beneficiaries’ statuses after claims have been paid is a reasonable extension of CMS’s efforts.
Once notified, the contractors could then detect and recoup improper payments.
Improper Payments on Behalf of Unlawfully Present Beneficiaries
Remained Uncollected
Because CMS did not have policies and procedures to detect improper payments, it did not notify
the Medicare contractors to recoup the improper payments. Thus, $91,620,548 in improper
payments for CYs 2009 through 2011 remained uncollected (Table).

5

Table. Improper Payments That Remained Uncollected
Type of Claim
2009
2010
2011
Inpatient Hospital
$18,501,533 $16,401,100 $7,081,735
Outpatient Hospital
12,430,927
8,883,206
2,531,508
3
Physician and Other Services
6,404,982
5,085,796
1,750,540
Skilled Nursing Facility
2,128,523
2,050,564
1,013,645
Home Health Agency
2,175,142
1,236,631
458,862
Durable Medical Equipment
1,389,225
1,120,367
207,161
Hospice
269,584
278,516
221,001
Total
$43,299,916 $35,056,180 $13,264,452

Total
$41,984,368
23,845,641
13,241,318
5,192,732
3,870,635
2,716,753
769,101
$91,620,548

RECOMMENDATIONS
We recommend that CMS:
•

ensure that Medicare contractors recoup the $91,620,548 in improper payments,

•

implement policies and procedures to detect and recoup improper payments made for
Medicare services rendered to unlawfully present beneficiaries in cases when information
relating to unlawful presence is received on previously paid Medicare claims, and

•

identify improper payments made on behalf of unlawfully present beneficiaries after our
audit period but before implementation of policies and procedures and ensure that
Medicare contractors recoup those payments.

CENTERS FOR MEDICARE & MEDICAID SERVICES COMMENTS AND
OFFICE OF INSPECTOR GENERAL RESPONSE
In written comments on our draft report, CMS concurred with our last two recommendations and
stated that in April 2013 it plans to implement a process for detecting and recouping improper
payments for previously paid Medicare claims. CMS partially concurred with our
recommendation regarding the recoupment of the $91,620,548 in improper payments.
CMS’s comments appear in their entirety as the Appendix.

3

For this report, this category includes, but is not limited to, ambulance services, home health services not covered
under Medicare Part A, laboratory services, and physical therapy.

6

Recoupment of Improper Payments
Centers for Medicare & Medicaid Services Comments
CMS stated that it is committed to recovering overpayments we identified, but it must take into
account the cost benefit of recoupment activities, including potential appeal costs and the cost of
manually reopening these claims.
CMS added that our review did not consider retroactive updates of beneficiary records to reflect
lawfully present status. According to CMS, some of the payments that we had identified as
improper may have been appropriate if beneficiary records relating to our audit period had been
retroactively updated.
Office of Inspector General Response
After providing its comments, CMS advised us that it had initiated recovery actions for CY 2009
claims and that it would shortly begin to recoup improper payments for CY 2010 and 2011
claims as well. We acknowledge that CMS must take into account the cost benefit for
recoupment activities. We encourage CMS to continue to recover these improper payments in
accordance with its policies and procedures.
We disagree with CMS’s comment that we did not consider retroactive updates. For our review,
we used the most current CMS information available that would have included retroactive
updates to that point to determine improper payments. However, we acknowledge that some
retroactive adjustments may have occurred after our audit. Therefore, we agree that CMS’s
recovery efforts should take into account any instances in which beneficiaries’ records were
retroactively updated to reflect lawfully present status.
Provider Access to Unlawful Presence Information
Our draft report also contained a finding and associated recommendation (referred to as
Recommendation 1 in CMS’s comments) regarding provider access to the unlawful presence
information that CMS used to prevent improper payments. CMS did not concur with that
recommendation because one of its systems gives providers access to that information. After we
issued our draft report, CMS gave us supplemental information regarding provider access.
Specifically, CMS said that all providers can make beneficiary eligibility inquiries before filing
claims, either through the Medicare contractors or through the Health Insurance Portability and
Accountability Act (HIPAA) Eligibility Transaction System (HETS). CMS noted that for three
specific reasons, including cases in which the beneficiary has been classified as an “illegal
alien,” the HETS informs providers of a beneficiary’s ineligibility for Medicare benefits without
giving the specific reason for that ineligibility.
After reviewing CMS’s comments regarding provider access to unlawful presence information
and after getting further information from CMS, we removed that finding and recommendation
from this report.

7

APPENDIX

Page 1 of3
APPENDIX: CENTERS FOR MEDICARE & MEDICAID SERVICES COMMENTS

/ ....-. ....
(

~

,<~

DEPARTMENT OF HEALTH &. HUMAN SERVICES

CenlMS for MediaI,e &. Medicaid Se~

Administrlltor
Washinvton. DC 20201

NOV 1 5 2012

DATE:

TO:

FROM:

Daniel R. Levinson
Inspector General

~en!ler

SUBJECf:

A~inislralor

Office of Inspector General (010) Draft Report: " Medicare Imprope rly Paid
Prov iders Millions of Dol lars for Unlawfull y Present Beneficiaries for Calendar
Ycurs 2009 T hrough 20 11 " (A-07-12-01 116)

The Centers for Medicare & Medicaid Serv ices (eMS) appreciates the opJXlrl unity to review and
comment on the subject OIG draft report. T he objective of this study is to de termine whether
e MS had adequate controls to prevent and detect im proper payments for Medicare services
rendered to unlawfu ll y prescnt beneficiaries.
Medicare does not pay for serv ices re ndered to illl ali!': 11 beneficiary who was no t lawfully present
in the United States (ulllawfully present) on the date o f seIVice. The Social Security
Administration (SSA) is eMS' primilry source of infonnation ahout un lawfu ll y present
beneficiaries. SSA collects information from federal agencies, including the Departme nt o f
Homeland Securit y, and transmi ts these data to CMS. With this info rmat ion, CMS dete rmi nes
which beneficiaries are unlawfully present and the periods for w hich Medicare will not pay for
health care seIVices provided In these indiv iduals.
The CMS appreciates 0I0· s eITons in working with us to help ide ntify billing issues associated
with payments made to or on behalf of beneficiaries w ho arc un lawfully prese nt in the United
States on the date of selVice. Based on O IG's recommendation in this repon, CMS is developing
new instructions and procedures 10 identify previously paid claims for services furnis hed to
Medicare benel1ciaries classified as ·'unla ....f ully present" which are scheduled In go into effect
April 2013.
DIG Recommendation I 1
The OIG recommends that eMS change the timing by which it grants prov iders access to
beneficiaries' unl awful presence infonnation, so that providers have access to th at infonnatio n
before they submit claims to Medicare contractors instead o f gaining tha t access when claims are
den ied.

10mce of Inspector ~neral Note - This section is not applicable because the finding and
recOOlmendation referred to by the auditee are not included in this report.

Page 2 of3

Page 2 - Daniel R. Levinson

eMS Response
T he eMS non-concurs with tbe recommendation. This non-concurrence is based upon incorrect
information that Medicare providers do not have access LO infonnation regarding beneficiaries'
ineligibility for Medicare benefits prior to submitting a claim. Medicare providers do have
access 10 Ihis information for beneficiaries and have had such access for many years, including
those years included in O IG 's aud it. All providers 3rc able to make beneficiary eligibility
inquiries in advance of fil ing a claim either through the Medicare Administrative Contractors or
through the HIPAA Eligibility Transaction System (HETS).l While the provider will not be told
the reason for ineligibility (also known as the period of inactivity), the provider has access to the
beginning and end dates for the period o f inact ivity, and the rea.'\On behind the inactivity is based
on one of the following three reasons: (1) the Medicare beneficiary has been classified as an
illegal alien; (2) the Medicare beneficiary has been deported; (3) the Medicare beneficiary has
been incarcerated. Therefore the provider has information about the period of inactivity and the
relevant dates, prior to su bmitting a claim.
OIG RL'Cummcndation 2
The OIG reco mmends th at eMS ensure that Medicare contractors recoup th e $91,620,548 of
improper paymenL<;.
C MS Response
The CMS partially concurs with the recommendation 10 collect $91,620,548 in improper
payments. CMS is committed to collecting overpayments identified in this D IG report. In
recovering overpayments, C MS must take into account the respective cost be nefit of recou pment
acti vities, including potential appeal cosl<; and efforl<; to manually reopen, reprocess, and track
these claims. In add ition. OIG's review did not consider if the bendiciary records were
retroactively updated to reflect a lawfu ll y prese nt s tatus. As a resu h , some of the claims
iden tified by DIG as improper payments may actua ll y be appropriate.

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21 1

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Medi .... benefit> " .. ' • period. of ,ime: fO! .n~ "n, oJ•• following ' '''''''''"'
• The Med,,,,, e,,,,,ro<w-, b.. ""--.;n olo",ir",d •• an ,1i<g>I.Lien i. "'" IInlled SIa,<>.
• The: Med","-" H... fid.ry b.., be,n IkpurLed from ,h. Un;'"" S.. I.S.
• The Mediur< llo""fo< w-, hasbcc. ,noa""'''l<d
• No .. , Info,m .. iQ" :<p«ifyint''''''''''''''' for "'e I""~ QI ir><IiJjbm,y will n<>1 b< "i<...,d.

Page 3 of3

Page 3 - Daniel R. Le vinson

DIG Recommendation 3
The DIG recomm ends that eMS implement policies and procedures to de tect and recoup
improper payments made for Medicare services rendered 10 un lawfully prese nt beneficiaries in
cases when information re la ting to unlawful prese nce is received on previously paid Medicare
claims.
CMS Response
The eMS concurs lmd has developed instructions to implement DIG ' s recom mendation . Change
Rcqucsl8009. entitled " New lnfonnational Unsolicited Respon£c (fUR) Process to Identify
Previously Paid Claims for Services Furnished to Medicare Beneficiaries Classified as
' Unlawfully Present ' in the United States" is prese ntly scheduled for impleme ntat ion in April
2013.

DIG Recommendation 4
The DIG recommends that eMS identify improper paymen ts that were made on behalf of
unlawfully present beneficiaries after our audit pe ri od but before implementat ion of policies and
procedures and ensure that Medicare contractors reco up th ose payments.

eMS Res ponse
The CMS umcurs with the recommendation and is developing a strategy to automate the
identification of impro~r payments made after OIG' s aud it period and befo re the lUR process,
noted above, is implemented. CMS projects that recoupment efforts will, tentatively, begin in

July 2013.
The eMS thanks OIG for the opportunity to review and co mment on this report.