Federal Bureau of Investigation:

Accountability over the HIPAA Funding of Health Care Fraud Investigations Is Inadequate

GAO-05-388: Published: Apr 22, 2005. Publicly Released: May 16, 2005.

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The Health Insurance Portability and Accountability Act of 1996 (HIPAA) provided, among other things, funding by transfer to the Federal Bureau of Investigation (FBI) to carry out specific purposes of the Health Care Fraud and Abuse Control Program. Congress expressed concern about a shift in FBI resources from health care fraud investigations to counterterrorism activities after September 11, 2001. Congress asked GAO to review FBI's accountability for the funds transferred under HIPAA for fiscal years 2000 through 2003. GAO determined (1) whether FBI had an adequate approach for ensuring the proper use of the HIPAA transfers and (2) the extent to which FBI had expended these transferred funds on health care fraud investigations in fiscal years 2000 through 2003.

FBI used a limited approach to monitoring its use of HIPAA transfers, which might have been sufficient during times when it clearly used more agent full time equivalents (FTEs) for health care fraud investigations than budgeted but was insufficient when some of the agent FTEs previously devoted to health care fraud investigations were shifted to counterterrorism activities. FBI's budgeted FTEs (agent and other personnel) and related costs (such as rent and utilities) were equivalent to the amount of the HIPAA transfers. However, FBI's approach to monitoring the use of HIPAA transfers considered only agent FTEs, which made up about 42 percent of the budgeted health care fraud costs, but did not consider other personnel FTEs or related costs. According to FBI officials, they did not monitor these other budgeted amounts to determine compliance with HIPAA because the actual agent FTEs were historically far in excess of those budgeted. However, once FBI began to shift agent resources away from health care fraud investigations, agent FTEs charged to health care fraud investigations fell below the budgeted amounts, and FBI could no longer rely on this limited approach to ensure that the transferred HIPAA funds were properly used. Furthermore, FBI did not have a system in place to capture its overall health care fraud investigation costs, and therefore, was not in a position to determine whether or not all transferred HIPAA funds were properly expended. In response to GAO's review, FBI engaged in extensive manual efforts to develop cost estimates related to health care fraud investigations for fiscal years 2000 through 2003. The final estimate provided to GAO showed that FBI spent more on health care fraud investigations than was funded by transfers for each of the 4 years. However, GAO found that, overall, FBI's estimates of its health care fraud investigation costs were based on data that had not been or could not be fully validated. Therefore, even though FBI made a good-faith effort to estimate these costs, because of data limitations, neither GAO nor FBI could reliably determine whether all of the HIPAA transfers were spent solely for health care fraud investigations and related activities for the 4-year period. DOJ is currently planning the implementation of a new DOJ-wide UFMS, but it has yet to develop the specific systems requirements that would enable FBI to accurately capture all of its health care fraud-related costs and therefore to help monitor compliance with HIPAA and other relevant laws and regulations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The FBI agreed with our recommendation. In October 2013, the FBI implemented the Unified Financial Management System (UFMS), which allows it to track and monitor health care fraud investigation costs in the aggregate and for each FBI office. With the implementation of these cost tracking capabilities in UFMS, we believe these system improvements have superseded the need for interim measures and, therefore, the intent of this recommendation has been met.

    Recommendation: The Director of the FBI should develop formal, interim policies and procedures for reporting health care fraud investigation costs that specify (1) the costs to be estimated and/or allocated, (2) the supporting documentation to be maintained, and (3) the method to validate those data used.

    Agency Affected: Department of Justice: Federal Bureau of Investigation

  2. Status: Closed - Implemented

    Comments: FBI established a semiannual audit of TURK in FY 2006 and required the correction of any errors discovered. This audit satisfies the recommendation.

    Recommendation: The Director of the FBI should periodically conduct statistically valid testing of the data in the Time Utilization and Record Keeping (TURK) system, in particular, the work time percentages and related investigative classification information to ensure the TURK system's reliability. In addition, require field office managers to follow up on any issues identified in the testing.

    Agency Affected: Department of Justice: Federal Bureau of Investigation

  3. Status: Closed - Implemented

    Comments: The FBI agreed with this recommendation. In response, the FBI implemented the Unified Financial Management System in October 2013, which included unique identifiers the FBI can use to identify payroll costs in the aggregate and for each FBI office.

    Recommendation: The Director of the FBI should either specify that the Unified Financial Management System (UFMS) have the capability to allocate payroll costs provided by the National Finance Center (NFC) payroll system to specific programs or develop cost accounting codes at the program and subprogram levels to enable NFC to provide the necessary detailed payroll reports.

    Agency Affected: Department of Justice: Federal Bureau of Investigation

  4. Status: Closed - Implemented

    Comments: The FBI agreed with this recommendation. In response, the FBI implemented the Unified Financial Management System in October 2013, which included unique identifiers the FBI can use to identify nonpersonnel costs in the aggregate and for each FBI office.

    Recommendation: The Director of the FBI should ensure that the UFMS has the capability and design specifications to track nonpersonnel costs related to health care fraud investigations.

    Agency Affected: Department of Justice: Federal Bureau of Investigation

 

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