The Department of Health and Human Services ("DHHS") has released its proposed FY 2015 budget, which is broken down and discussed in its Fiscal Year 2015 Budget in Brief.  This document announces a proposed total budget of over $1 trillion.  85% of the budgeted outlays will be for Medicare and Medicaid. 

One of the interesting aspects of the budget is the priority given to enforcement.  The budget represents an additional $428 million in Health Care Fraud and Abuse Control Program ("HCFAC") and Medicaid program integrity funds.  The FY 2015 FCFAC program level will be $2 billion.  DHHS views enforcement activities as having a high return on investment, touting a three-year rolling average return on investment for HCFAC law enforcement activities of 8.1 to 1.   The budget also contains a number of legislative and regulatory proposals relating to program integrity, some of which are highlighted below.  Many of these proposals appear to have been developed with at least the partial goal of savings to the Medicare and Medicaid programs.

Exclude Certain Services from the In-Office Ancillary Services Exception

This exception to the Stark Law allows physicians to self-refer patients for designated health services.  DHHS believes this exception may have resulted in overutilization and rapid growth of certain services.  Accordingly, DHHS proposes that effective calendar year 2016, this exception be amended to prohibit certain referrals for radiation therapy, therapy services, advanced imaging, and anatomic pathology services, except in cases where a practice meets certain accountability standards as defined by the Secretary of DHHS.  DHHS believes this will save $6 billion over ten years.

Allow Prior Authorization for Medicare Fee-for-service Items

This proposal would extend prior authorization authority to all Medicare fee-for-service items, particularly those service items DHHS believes are at the highest risk for improper payment.  This proposal would require the Secretary of DHHS to implement prior authorization for power mobility devices and advanced imaging.  DHHS believes this will save $90 million over ten years.

Allow Civil Monetary Penalties for Providers and Suppliers who Fail to Update Enrollment Records

This proposal would allow civil money penalties to be imposed on Medicare providers and suppliers who fail to update their records.  DHHS believes this would give providers and suppliers additional incentive to report up-to-date information (such as adverse legal actions) and help reduce program vulnerability to fraud.  DHHS believes this will save $90 million over ten years.

Expand Medicaid Fraud Control Unit Review to Additional Care Settings

This proposal would allow Medicaid Fraud Control Units to receive federal matching funds for the investigation or prosecution of abuse and neglect in non-institutional settings, such as home-based care.

Track High Prescribers and Utilizers of Prescription Drugs in Medicaid

This proposal would track high prescribers and utilizers of prescription drugs in Medicaid.  States would be required to monitor high risk billing activity to identify and remediate prescribing and utilization patters that may indicate abuse or excessive utilization of certain prescription drugs in the Medicaid program.  States may choose one or more drug classes and must develop or review and update their care plan to reduce utilization and remediate any preventable episodes to improve Medicaid integrity and beneficiary quality of care.  DHHS believes this will save $540 million over ten years.

Retain a Portion of Recovery Audit Contractor Recoveries to Implement Actions That Prevent Fraud and Abuse

Currently, CMS can use the recovered funds from the Recovery Audit Contractor program to administer the program but cannot use these funds to implement corrective actions, such as new processing edits and provider education and training, to prevent future improper payments.  This proposal would change this funding restriction.  DHHS believes this will save $250 million over ten years.

Permit Exclusion from Federal Health Care Programs if Affiliated with Sanctioned Entities

This proposal would expand current authority to exclude individuals and entities from federal health care programs if they are affiliated with a sanctioned entity by: eliminating the "loophole" that allows an officer, managing employee, or owner of a sanctioned entity to avoid exclusion by resigning or divesting ownership; and extending exclusion authority to entities affiliated with a sanctioned entity.  DHHS believes this will save $60 million over ten years.