HHS' inspector general's office saved taxpayers $16.8 billion in the first six months of fiscal 2004, nearly $4 billion more than during the same period last year, according to the agency's semiannual report.
But it's unclear how much it will save taxpayers in the months ahead, after its interim chief last week said she planned to recuse herself from all hospital-related duties.
In a move that has ignited concern about further agency leadership instability, HHS' Acting Principal Deputy Inspector General Dara Corrigan, once said to be a contender for the post of inspector general, has recused herself from cases involving hospitals because she is negotiating for employment with a not-for-profit hospital system.
Modern Healthcare first disclosed her recusal in an e-mail alert June 3.
Corrigan, 39, who would not comment for this story, immediately notified the HHS top ethics officer, Edgar Swindell, and briefed deputy inspectors general of her potential conflict and recusal decision.
"I have already disqualified myself from participation in all particular matters specifically involving this hospital system," Corrigan wrote in a June 3 letter to the deputy inspectors general and the agency executive secretary. "In order to avoid a conflict of interest, I am also recusing myself from all particular matters of general applicability that could have a direct and predictable effect on healthcare systems providing inpatient and outpatient medical services, or hospitals."
While Corrigan has not announced her resignation, sources within the inspector general's office said that she is planning to leave and has likely been told she will not be appointed as the permanent inspector general. If she leaves, Corrigan becomes the second person in about a year to lead the nation's chief healthcare-fraud enforcement agency at a time when its oversight responsibilities are expanding and its budget remains flat. Corrigan came to the office June 1, 2003, to replace Inspector General Janet Rehnquist, who resigned under pressure after reports from several government watchdog agencies and Sen. Chuck Grassley (R-Iowa) criticized her job performance, ethics and behavior.
The office is engaged in a number of important tasks, including monitoring the prescription drug benefit passed by Congress last year and conducting probes into the National Institutes of Health and former CMS Administrator Tom Scully. It's also playing a role in a new CMS hospital compliance pilot project.
Agency spokeswoman Judy Holtz said the agency's oversight of that pilot program will not be affected by Corrigan's recusal or departure, noting that Chief Counsel Lewis Morris will lead those efforts for the office.
Not having a permanent inspector general leads to timidity and an inability to aggressively pursue what's needed for the agency, said James Moorman, president of Taxpayers Against Fraud, a False Claims Act advocacy organization. He said the office needs a permanent inspector general, not an acting one. He suggested that the Bush administration's lag in naming someone to the permanent post "can only lead to declining morale and instability."
"Absolutely the agency is crippled without a permanent inspector general," he said. "I've never understood what's taken so long. A lot of what this office does results in political battles and it's difficult to stand up to political pressure without the title and authority it confers."
No deputy inspector general
Only the inspector general can name a principal deputy inspector general, and because Rehnquist didn't, the position has remained vacant. In her current capacity, Corrigan can neither be the principal deputy nor appoint one. Rehnquist was also absent for much of the period after she announced her departure in February, leaving the office without a permanent inspector general for nearly 16 months.
Corrigan's recusal became effective last week and will remain until her job negotiations have terminated. In the meantime, deputy inspectors general, the chief counsel or the director of external affairs will handle matters without consulting Corrigan. Holtz confirmed the recusal and Corrigan's potential departure. She said Corrigan, who allegedly interviewed for a position in the Washington-Baltimore area, will continue to handle other inspector general responsibilities, including overseeing the Head Start, foster-care and other non-health-related programs.
"Screening procedures have been put into place until the issue is resolved and we hope it's resolved quickly," Holtz said. She said the inspector general's staff would review Corrigan's phone calls, e-mails, letters and reports to ensure that she doesn't see anything that she shouldn't.
Corrigan's move did not surprise some healthcare lawyers and Washington insiders. She publicly stated her interest in being appointed to the permanent inspector general position. But after nearly a year on the job and high marks from providers, inspector general's office staff and legislators, she has not been offered the job and began an employment search.
Reports due soon
Sources from within and outside the inspector general's office said the timing is interesting. The inspector general is slated to release in the coming weeks a report investigating Scully, who allegedly threatened a CMS analyst with termination if he gave Congress the accurate cost of last year's Medicare Prescription Drug, Improvement and Modernization Act. Sources also indicated President Bush is unlikely to nominate Corrigan's successor, rumored to be General Services Administration Inspector General Dan Levinson, until after the report's release.
Levinson was appointed in August 2001 and previously served as deputy general counsel for both the Office of Personnel Management and the Consumer Product Safety Commission. Prior to his government service he worked in private legal practice. Bill Pierce, a spokesman for HHS Secretary Tommy Thompson, refused to comment, as did spokesmen at the American Hospital Association.
But healthcare lawyers and compliance officers who interact with the inspector general's office spoke highly of Corrigan's openness and willingness to provide guidance and to work with them to achieve compliance. "Dara Corrigan has been warmly received by the compliance industry because she's taken the time to visit with us and speak at our conferences and they appreciated her open and friendly style," said Roy Snell, CEO of the 3,300-member Health Care Compliance Association. "Despite the changes in leadership and staff, there have been a core group of individuals, such as Lewis Morris, who have insured continuity from month to month and year to year."
Corrigan came to the post from the CMS, where she headed program integrity and previously served in the office of counsel. She is a former assistant U.S. attorney in Washington. She set out quickly to restore morale to the agency, which suffered major personnel and leadership changes under Rehnquist.
"If Dara Corrigan is not going to be named inspector general, it's fair for her to be looking for another job and appropriate that she remove herself from possible conflicts of interest with her current responsibilities," Grassley told Modern Healthcare last week. "However, this situation underscores the urgency of putting an inspector general on the job who can be a watchdog over every kind of issue involving the Department of Health and Human Services. It's an enormous agency that's responsible for vitally important health and social programs, and billions of dollars of expenditures each year. A new inspector general needs to be put in place as quickly as possible to exercise independent oversight of the Department of Health and Human Services," Grassley said.
Former HHS Inspector General Richard Kusserow, now president of consulting firm Strategic Management Systems, said Corrigan has performed admirably without the title. "But it's been really awkward for her, because she hasn't had that authority," Kusserow said. "And it's difficult to be effective."