Federal Reports

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Financial statements of the Appalachian Regional Commission (ARC), which comprise the consolidated balance sheets as of September 30, 2015 and 2014, and the related consolidated statements of net cost, changes in net position, and combined budgetary resources for the years then ended, and the related notes to the financial statements (hereinafter referred to as “financial statements”)

We summarized the high-risk security vulnerabilities that we identified as audit findings in our previous reviews of information system general controls at three California Medi Cal managed-care organizations (MCOs). We identified 74 high-risk security vulnerabilities in the information system general controls at the 3 Medi-Cal MCOs we reviewed. We grouped these 74 vulnerabilities into 14 security control areas within 3 information system general control categories: access controls, configuration management, and security management. In 6 of the 14 security control areas, all 3 MCOs had vulnerabilities, which accounted for 53 of the 74 vulnerabilities. Accordingly, we determined that most of the 74 vulnerabilities were significant and pervasive.

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During this period, we completed 74 investigations involving fraud or corruption related to the Department’s programs and operations, securing about $50 million in settlements, fines, restitutions, recoveries, forfeitures, and savings. In addition, as a result of our investigative work, criminal actions were taken against a number of people, including school officials and service providers who cheated the students they were in positions to serve. We also issued nine audit reports that contained recommendations to improve program operations.

The Inspector General Act of 1978 (Public Law 95-452), as amended, requires that the Inspector General report semiannually to the head of the Department and the Congress on the activities of the office during the 6-month periods ending March 31 and September 30. The semiannual reports are intended to keep the Secretary and the Congress fully and currently informed of significant findings and recommendations by the Office of Inspector General.

The Inspector General Act of 1978 (Public Law 95-452), as amended, requires that the Inspector General report semiannually to the head of the Department and the Congress on the activities of the office during the 6-month periods ending March 31 and September 30. The semiannual reports are intended to keep the Secretary and the Congress fully and currently informed of significant findings and recommendations by the Office of Inspector General.

The State agency claimed Medicaid reimbursement for some Adult Day Health Care Services (ADHC) services provided by Center for Nursing and Rehabilitation (CNR) that did not comply with certain Federal and State requirements. Of the 100 claims in our random sample, 90 complied with Federal and State requirements, but 10 did not. We estimated that the State agency improperly claimed at least $283,000 in Federal Medicaid reimbursement for ADHC services provided by CNR that did not comply with certain Federal and State requirements.

The New York State Department of Health (State agency) claimed Medicaid reimbursement for some adult day health care services (ADHC) provided by Metropolitan Jewish Health System (MJHS) that did not comply with certain Federal and State requirements. Of the 100 claims in our random sample, the State agency properly claimed Medicaid reimbursement for 80 claims. Of the remaining claims, 18 contained services that did not comply with Federal and State requirements, and, for 2 others, we could not determine whether the associated services complied with Federal and State requirements. We estimated that the State agency improperly claimed at least $1.1 million in Federal Medicaid reimbursement for ADHC services provided by MJHS that that did not comply with certain Federal and State requirements.

Under the Children's Health Insurance Program Reauthorization Act of 2009, Congress appropriated $3.225 billion for qualifying States to receive performance bonus payments (bonus payments) for Federal fiscal years (FYs) 2009 through 2013 to offset the costs of increased enrollment of children in Medicaid.

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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.

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This is an audit of the NEA's balance sheets as of September 30, 2015 and 2014, and the related statements of net cost, changes in net position, and budgetary resources (financial statements) for the years then ended, and the related notes to the financial statements. The objective of the audit was to express an opinion on the fair representation of those financial statements. Additionally, the audit considered the NEA's internal control over financial reporting and tested the NEA's compliance with certain provisions of applicable laws, regulations, contracts, and grant agreements that could have a direct and material effect on its financial statements. The audit resulted in a clean opinion, with one significant deficiency and recommendation.

Annually, the Office of Inspector General (OIG) prepares a summary of the most significant management and performance challenges facing the Department of Health and Human Services. We refer to this summary as the Top Management Challenges (TMC). The TMCs and the Department's progress toward addressing them reflect continuing vulnerabilities that OIG has identified for HHS over recent years. TMCs also forecast new and emerging issues HHS will face in FY 2016 and beyond. The assessment is included as an appendix to the publicly available HHS FY 2015 Agency Financial Report.

The Inspector General Act of 1978, as amended, requires federal inspectors general, including the Tennessee Valley Authority (TVA) OIG to review the work of nonfederal auditors to assure their work complies with Government Auditing Standards (GAS) as set forth by the Comptroller General of the United States. We reviewed the work of Ernst & Young LLP (EY) in relation to its audit of TVA's fiscal year 2015 financial statements and internal control over financial reporting. Our review, as differentiated from an audit in accordance with GAS, was not intended to enable us to express, and we do not express, an opinion on TVA's financial statements or the effectiveness of TVA's internal control over financial reporting. EY is responsible for the auditor's reports dated November 20, 2015, and the conclusions expressed in those reports. However, our review of EY's work disclosed no instances where they did not comply, in all material respects, with GAS.

University of California, Davis, Medical Center (the Hospital), located in Sacramento, California, complied with Medicare billing requirements for 130 of the 231 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 101 claims, resulting in overpayments of $2.4 million for calendar years 2011 through 2013. These overpayments occurred primarily because the Hospital's controls were not adequate to prevent incorrect billing of these Medicare claims within the selected risk areas that contained errors.

This report contains Sensitive But Unclassified information. To obtain further information, please contact the OIG Office of Counsel at OIGCounsel@oig.treas.gov, (202) 927-0650, or by mail at Office of Treasury Inspector General, 1500 Pennsylvania Avenue, Washington DC 20220.

The Office of Inspector General issued the audit of PBGC's Financial Statement Closing Package for Fiscal Year 2015 and 2014.The financial statements and accompanying notes contained in the closing package were prepared for the purpose of complying with the requirements of the U.S. Department of the Treasury's Financial Manual (TFM) Volume I, Part 2, Chapter 4700 solely for the purpose of providing financial information to the U.S. Department of the Treasury and U.S. Government Accountability Office to use in preparing and auditing the Financial Report of the U.S. Government, and are not intended to be a complete presentation of PBGC's financial statements.We report that the financial statements and accompanying notes presented fairly, in all material respects, the financial position of PBGC as of September 30, 2015 and 2014, and its net costs and changes in net position for the years then ended in conformity with accounting principles generally accepted in the United States of America and the presentation pursuant to the requirements of the TFM Volume I, Part 2 Chapter 4700.

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.