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GAO-01-136R 1 (2000-10-31)

handle is hein.gao/gaobaalre0001 and id is 1 raw text is: I Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 October 31, 2000 The Honorable Thomas Bliley Chairman Committee on Commerce House of Representatives Subject: HCFA Extended Its Contract With Accounting Firm Implicated in Maior Fraud Dear Chairman Bliley: This letter responds to your June 16, 2000, request that we investigate the Health Care Financing Administration's (HCFA) oversight of contractors in its Audit Quality Review Program. That program reviews the work of Medicare auditors. As such, it entails checking whether Medicare auditors have done their work appropriately to detect improper or fraudulent charges. In particular, you expressed concern with the circumstances surrounding KPMG's' performance of a national audit quality review contract, given difficulties the firm has encountered since the contract award in September 1997. We conducted our investigation from June 2000 through mid-October 2000 in accordance with quality standards for investigations as set forth by the President's Council on Integrity and Efficiency. We interviewed officials and reviewed documents from HCFA, the Department of Health and Human Services, the Federal Bureau of Investigation, and the Department of Justice. We also spoke with attorneys representing KPMG. In brief, during its performance of the HCFA audit quality review contract from September 1997 to September 2000, KPMG was implicated in a significant Medicare fraud case against its client, Columbia/HCA. Specifically, KPMG advised Columbia/HCA on preparing cost reports whose submission led to criminal and civil fraud charges against Columbia/HCA. Two Columbia/HCA executives were convicted of conspiracy and criminal fraud in July 1999. Columbia/HCA has also agreed to pay the government approximately $750 million in partial settlement of the civil fraud claims. Senior HCFA officials and officials in the General Counsel's office of the Department of Health and Human Services were in a position to be generally aware of allegations that Columbia/HCA engaged in fraud and that KPMG contributed 1IKPMG was formerly known as KPMG Peat Marwick. GAO-01-136R HCFA Contracted With Firm Implicated in Fraud

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