The United States Department of Health and Human Services (HHS), Office of Inspector General (OIG), has released its new FY 2010 Work Plan (Plan). The majority of the projects described in the Plan originate from two components within the OIG: the Office of Audit Services (OAS), which conducts financial, billing, and performance audits of HHS programs; and the Office of Evaluations and Inspections (OEI), which provides management reviews and evaluations of HHS program operations. The Plan, while building on prior years' projects, also includes new priorities relating to the American Recovery and Reinvestment Act of 2009 (Recovery Act), including a number of projects related to implementation of health care information technology priorities. This plan also is the first for the Obama administration, which has previously indicated that funding for health care reform will come, in part, from recoveries of alleged Medicare and Medicaid overpayments.
Medicare Parts A and B
Provider-Based Status for Inpatient and Outpatient Facilities. This is the second consecutive year that the OIG has listed a review of the correct application of the provider-based rules in its annual Plan. When a hospital identifies a facility as provider-based, the services rendered there qualify for hospital-level inpatient or outpatient reimbursement — as opposed to reimbursement as a freestanding entity.
Unlike the FY 2009 Work Plan, which focused on both the general application of the rules and the hospital ownership of physician practices, this year only the general review remains on the Plan as “in progress.” In light of the complexity and subjectivity of the provider-based rules coupled with the potential to generate significant “supplemental payments” through the outpatient prospective payment system, provider-based status remains an important area for internal compliance auditing and education. The OIG's continued interest in this important topic supports this suggestion.
Hospital Payments for Nonphysician Outpatient Services Under the Inpatient Prospective Payment System. The OIG has identified this area for review because of the significant number of improper claims identified in its previous work in this area. OIG will review the appropriateness of payments for nonphysician outpatient services that were provided to beneficiaries shortly before or during Medicare Part A-covered stays at acute care hospitals. The Social Security Act prohibits separate payments for outpatient diagnostic services and admission-related nondiagnostic services rendered up to three days before the dates of admission.
Payments to Organ Procurement Organizations. As with other areas of OIG interest, the reimbursement on a cost basis for organ procurement costs makes this area a subject for review and auditing. An organ procurement organization (OPO) coordinates the retrieval, preservation, and transportation of organs for transplant and maintains a system to allocate available organs to prospective recipients. Recent experiences suggest that there is increasing fiscal intermediary attention to these costs. Providers should be vigilant in maintaining accurate cost information, including attention to historic Provider Reimbursement Manual requirements.
Critical Access Hospitals (CAHs). Despite the small size, limited resources, and essential role in rural communities of CAHs, the OIG is focusing attention on whether these institutions are meeting the CAH regulations and limitations. CAHs have the advantage of cost reimbursement plus enhanced physician reimbursement. Due to these payments above the reimbursements to inpatient prospective payment system (IPPS) facilities, CAHs are on the OIG's radar. Fortunately, auditing compliance with CAH requirements is relatively simple, and providers should be able to perform internal reviews with limited external oversight.
Provider Bad Debts. There is considerable disagreement between the provider and intermediary experts regarding the proper rules for calculating reimbursable Medicare bad debts (unpaid copayment and deductible amounts from Medicare beneficiaries). Among the greatest challenges for providers is the intermediary practice of refusing to reimburse providers for bad debts if the accounts have not been recalled from outside collection agencies, regardless of how old or worthless the accounts. The OIG has not noted this issue, and it will be of interest to the provider community if the OIG weighs in at this point. Beyond the general ability to claim bad debts, the OIG also is investigating whether providers are offsetting bad debts that were claimed in prior years if they are, in fact, paid in future years.
Reliability of Hospital-Reported Quality Measure Data. This also is the second year in a row that the OIG has announced it will review hospitals' controls related to quality of care data that they submit to the Centers for Medicare & Medicaid Services (CMS). Hospitals are required to report quality measures for a set of 10 indicators to CMS. Failure to report the quality measures results in a two-percent payment reduction. OIG will determine whether hospitals have implemented sufficient controls to ensure that their quality measurement data are valid.
Hospital Admissions With Conditions Coded Present-on-Admission. The OIG also will review another of CMS's key quality and payment initiatives. For certain diagnoses specified by CMS, hospitals receive a lower payment amount if the specified diagnoses were acquired in the hospital rather than being present on admission (POA). The OIG will review Medicare claims to determine the number of inpatient hospital admissions with POA diagnoses and will analyze which facilities and providers transferred a high number of patients to hospitals with POA diagnoses.
Adverse Events. The terms “never events,” or “serious reportable events,” refer to a subcategory of adverse events that the National Quality Forum (NQF) deemed “should never occur in a health care setting” such as, for example, surgery on the wrong limb. Although the OIG reviewed never events last year, it has now expanded its review to include adverse events. Reviews of adverse events will include: national incidence among Medicare beneficiaries, including types of adverse events and the extent to which serious reportable events and other adverse events were preventable; methods to identify events; early implementation of Medicare's policy for hospital-acquired conditions (HACs); and public disclosure of adverse event information.
Emergency Medical Treatment and Active Labor (EMTALA) Oversight by CMS. The OIG is undertaking a new review of CMS's oversight of EMTALA rules. In particular, the OIG is looking into variations among regions in the number of EMTALA complaints as well as how CMS tracks complaints and cases. Of particular interest to hospitals, the OIG is signaling that it wants to know more about how CMS evaluates whether to terminate a hospital from Medicare for an EMTALA violation.
Observation Services During Outpatient Visits. Hospitals have many challenges in understanding observation status rules, not only in Medicare but in a diverse set of rules from commercial payors. This new OIG review will look into hospital compliance with the rules set out in the Claims Processing Manual. The OIG's study focuses on the financial impact of observation status on beneficiaries.
Coding for MS-DRGs. With the roll-out of the new severity adjusted diagnosis-related group (MS-DRG) payment system, the OIG is paying attention to the coding and documentation that helps set these new tiered DRG rates. The OIG is investigating whether there are any trends indicating that particular MS-DRGs are more likely than others to be upcoded.
Medicare Disproportionate Share Payments (DSH). Because of the increasing DSH payments, the OIG will review DSH payments made to hospitals in this fiscal year to determine whether these payments were made in accordance with Medicare methodology and to examine the total amounts of uncompensated care costs that hospitals incur.
Home Health Agencies (HHAs)
Perhaps because of the steep increase in total payments to HHAs since the home health prospective payment system (PPS) was implemented in 2000, the Plan's scrutiny of HHAs focuses almost exclusively on the accuracy and propriety of billings. The OIG will continue its review from previous years of Part B payments for home health beneficiaries, including payment for services and supplies provided under arrangements by outside suppliers; the extent to which the billing codes for home health resource groups are accurate; and the incidence of outlier payments for insulin injections by HHAs.
New areas of focus include:
Home Health Agency Outlier Payments. The Plan includes a review of CMS's methodology for calculating outlier payments for episodes of care that incur unusually high costs. Payments for such episodes have increased significantly in recent years.
Home Health PPS System Controls and HHA Profitability. Since the PPS system was implemented in 2000, total payments to HHAs have doubled to $16.4 billion in 2008. The Plan calls for an analysis of trends in HHA activities, including the number of visits to beneficiaries, arrangements with other facilities, and ownership information. The Plan also calls for a review of HHA “profitability trends” to determine “whether the payment methodology should be adjusted.”
Payments for Diabetes Self-Management Training Services (DSMT). The OIG plans to examine billing patterns in geographic areas with high utilization of DSMT services, which include self-monitoring of blood glucose, diet and exercise management, and insulin treatment. Medicare covers DSMT in a home-health setting so long as the services are provided by a certified provider according to a plan of care as directed by a physician. Due to the increasing incidence of Type II diabetes, the OIG might notice and investigate the rapid payment increase to HHAs.
Oversight of HHA Outcome and Assessment Information Set (OASIS) Data. The one new HHA quality performance review is of CMS's oversight of OASIS data. OASIS data, which HHAs are required to submit to CMS, measure HHAs' performance in assisting patients regain their ability to function and perform daily living activities, patients' physical status, and patients' use of various services. The OIG will review CMS's process for ensuring that HHAs submit accurate and complete OASIS data.
Skilled Nursing Facilities (SNFs)
The OIG's review of services provided to beneficiaries in SNFs focuses mainly on quality issues such as oversight of poorly performing facilities, the SNFs' adherence to quality of care requirements, and the appropriateness of mental health treatments. The Plan calls for a continuation of payment reviews of psychotherapy services and of antipsychotic drugs. In addition, the OIG will continue its examination of the accuracy of SNF Resource Utilization Groups (RUG) coding. Other areas to be reviewed by the OIG include:
SNFs' Use of the Resident Assessment Instruments (RAI) to Meet Quality of Care Requirements. SNFs that participate in Medicare and Medicaid are required to use standardized RAI to develop residents' plans of care. The OIG will look at the extent to which SNFs have based plans of care on RAIs, provided services in accordance with the plans of care, and planned for beneficiaries' discharges. In the past, as many as one quarter of residents' needs identified in RAIs were not reflected in plans of care.
Criminal Background Checks. In addition to the prohibition against employing an individual who has been excluded from participation in the federal health care programs, federal regulations prohibit long-term care facilities from employing individuals found guilty of abusing, neglecting, or mistreating residents. The OIG plans to scrutinize SNFs to determine whether individuals with such criminal convictions are being employed.
Part B Services in Nursing Homes. Congress has directed the OIG to monitor payments made for Part B services in SNFs because of a concern about the potential for abuse. Part B services, unlike services provided during a Part A SNF stay, are billed directly by suppliers and other providers. The review will asses the extent to which Part B services are provided in SNFs and the billing patterns among SNFs and other providers.
Physician Billing for Medicare Hospice Beneficiaries. The OIG will determine whether physicians have been double billing both Medicare Part A and Part B for services performed for hospice beneficiaries. Hospice regulations specify the physician services that are covered by the Medicare Part A Hospice benefit. Medicare pays the hospice for these services and the hospice, in turn, reimburses physicians. Physicians do however, sometimes perform services outside of the hospice benefit for hospice patients and may be paid under Medicare Part B for such services. The OIG will determine whether physicians have been inappropriately billing Part B for services covered under the Part A hospice benefit.
Medicare Incentive Payments for E-Prescribing. The OIG will review Medicare incentive payments to be made in 2010 to physicians and other eligible health care professionals for their 2009 e-prescribing reporting activities. Under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), physicians will be eligible for incentive payments in 2010 through 2013 if they are “successful electronic prescribers,” which is defined as physicians who report on CMS's e-prescribing quality measure with respect to at least 50 percent of cases involving services billed to Medicare. The OIG will assess whether — and, if so, the extent to which — incentive payments for e-prescribing activities in 2009 that are payable to physicians in 2010, are made in error.
Place of Service Errors. The OIG will review physician coding of “place of service” on Medicare Part B claims performed in ambulatory surgical centers (ASC) and hospital outpatient departments. Medicare pays physicians a higher amount for services performed in their offices than it does for services performed in hospital outpatient departments or, with certain exceptions, in an ASC. The OIG will determine whether physicians properly coded the place of service on claims provided in ASCs and hospital outpatient departments.
Evaluation and Management (E&M) Services During Global Surgery Periods. The OIG will review industry practices related to the number of E&M services provided by physicians and reimbursed as part of the global surgery fee. The OIG will determine whether industry practices related to the number of E&M services provided during this period have changed since the global surgery fee concept was developed in 1992.
Medicare Payments for Part B Imaging Services. The OIG will review Medicare payments for Part B imaging services performed by physicians. Physicians are paid for such services pursuant to the Medicare Physician Fee Schedule (MPFS). For selected imaging services, the OIG will review practice expense components, including the equipment utilization rate. The OIG will determine whether Medicare payment reflects the actual expenses incurred and whether the utilization rate reflects current industry practices.
Medicare Billings With Modifier GY. The OIG will review the appropriateness of the use by physicians and other providers of modifier GY on claims for services that are not covered by Medicare. The GY modifier is used in coding for services that are statutorily excluded or do not meet the definition of a covered service. Although providers are not required to provide beneficiaries with an Advance Beneficiary Notice for such services, beneficiaries are liable for all charges associated with these services. The OIG is concerned that beneficiaries may be unknowingly acquiring large medical bills.
Compliance With Assignment Roles. The OIG will examine the extent to which providers comply with assignment rules and determine if, and to what extent, beneficiaries are improperly billed in excess of amounts allowed by Medicare regulations. Physicians who accept assignment agree to accept the Medicare allowed amount as payment in full for services provided.
Payments for Services Ordered or Referred by Excluded Providers. The OIG will review the nature and extent of Medicare payments for services ordered or referred by excluded providers. The OIG is particularly concerned about services ordered by certain referring and ordering providers who are not required to enroll in Medicare, known as “secondary providers,” during the National Provider Identifier (NPI) transition period.
Ambulance End-Stage Renal Disease (ESRD) Transports. The OIG will review the extent to which ambulance services are used to transport ESRD beneficiaries to and from dialysis facilities. The OIG will examine factors such as the percentage of the population using ambulance services, the feasibility of contracting by freestanding facilities with ambulance suppliers, and the coverage policies of other health insurance programs.
Comprehensive Error Rate Testing (CERT) Program for Transportation Claims. The OIG will review the effectiveness of CMS's CERT methodology as applied to transportation/ambulance claims for FY 2008. The review will include beneficiaries' medical records, mileage, supplies, and services to determine whether the services were medically necessary and the charges were appropriately documented.
Other Medicare Providers
Services Performed by Clinical Social Workers. The OIG has announced a new audit of services provided by clinical social workers in inpatient (hospital or SNF) settings to determine whether the services were permitted to be separately billed to Medicare Part B. The OIG continues to be concerned by the unbundling of SNF services and overlapping Part A and B claims.
Enrollment Standards for Independent Diagnostic Testing Facilities (IDTFs). In another new study, the OEI will review whether IDTFs meet Medicare enrollment standards. Of particular concern will be the approach the OEI takes to the CMS's interpretation of the space-sharing prohibitions. These prohibitions bar a fixed-site IDTF from: (i) sharing a practice location with another Medicare-enrolled individual or organization; (ii) leasing or subleasing its operations or its practice location to another Medicare-enrolled individual or organization; or (iii) sharing diagnostic testing equipment with another Medicare-enrolled individual or organization. CMS has not published guidance explaining these requirements and consequently, they have been a source of real uncertainty for providers.
Durable Medical Equipment (DME) and Supplies
The majority of projects involving DME and supplies are ongoing and relate to same types of DME that the OIG has traditionally focused on. Examples include ongoing projects on: power wheelchairs and scooters, hospital beds and accessories (such as pressure-relieving devices), oxygen, home blood glucose testing supplies, and enteral/parenteral nutrition. The types of issues being reviewed include:
- Documentation concerns
- Claims for DME under Medicare Part B in SNF settings
- Use of appropriate modifiers in filing DME claims (for example, for insulin dependency for claims for home blood-glucose testing equipment)
- Whether requirements to establish medical necessity (such as face-to-face examinations for power wheelchairs) were met
- Issues around maintenance and repair of capped rental equipment
- Concerns about inaccurate or omitted enrollment information for DME suppliers
New starts this year focus on the following topics:
Physician Self-Referral for DME Services. The OAS will be examining the allowability of claims from DME suppliers in which physicians hold ownership interests to determine whether the claims are permitted under the Physician Self Referral (Stark) Law.
Appropriateness of DME Categorization. This evaluation project will review the classification and categorization of DME set forth in the Medicare fee schedule based on the OEI's concern that the categories no longer reflect current costs, expected duration of use, or repair and servicing needed.
Medicare Pricing for Parenteral Nutrition. This evaluation project is spurred by a concern that Medicare fee schedule payments for parenteral nutrition are 45-percent higher than Medicaid payments, 78-percent higher than Medicare Advantage payments, and 11 times higher than manufacturers' contract prices.
Part B Payments for Prescription Drugs
The OIG has announced five new starts on Part B prescription drug payment issues. This level of interest could not have been foreseen, given the primacy of Medicare Part D prescription drug issues in program cost and attention. Two of the three new projects focus on pricing issues: Comparing Average Sales Prices to Widely Available Market Prices and Comparing Average Sales Price to Average Manufacturer Prices. The remaining projects are focused on billing, off-label promotion, and fraud issues.
Billing for Immunosuppressive Drugs. This OAS project focuses on Part B claims for immunosuppressive drugs to determine whether the drugs are being billed in accordance with FDA-approved labels. Of particular concern is whether Medicare paid claims for immunosuppressive drugs that should not have been used in combination with other immunosuppressive drugs.
Payments for Off-Label Anticancer Pharmaceuticals and Biologicals. In this project, the OAS highlights that Medicare payments for anticancer drugs totaled $2.7 billion in CY 2007. The auditors will evaluate whether beneficiaries receiving off-label drug therapies were first treated with on-label therapies and, if so, whether they improved with such therapies. The purpose is to determine potential cost savings to Medicare had on-label therapies continued.
Medicare Advantage and Part D
FY 2010 will be an interesting year, promising closer scrutiny by the OIG of Medicare Advantage Organizations (MAO) and plan sponsors of Medicare prescription drug plans under Part D (Plan Sponsors). We first turn to significant issues under Medicare Advantage (MA) followed by a summary of the OIG's plans with respect to Part D.
Enhanced Payments for Certain Beneficiary Types. The OIG will review the appropriateness of claims submitted for beneficiaries classified as institutionalized, ESRD, or Medicaid-eligible. CMS adjusts payments to MAOs based on certain risk factors determined by disability status, institutional status, and other categories deemed appropriate. The OIG will determine the impact of inaccurate or invalid classification of beneficiaries on Medicare payments to MAOs.
Risk Adjustment Validation. The OIG plans to investigate more thoroughly MA risk-adjustment validation scores. The CMS conducts risk-score validations of plan submissions for each contract year. These scores are used to calculate MA plans' capitated payment rates. These scores also are used to align Medicare payment rates with beneficiaries' predicted costs. MAOs must report this information to CMS. The OIG will determine the extent to which CMS validates these plans' submissions and will use the findings of data discrepancies to change payments.
Beneficiary Appeals. The OIG will review the response of MA plans to beneficiaries' appeals of denials, reductions, or terminations of services. The regulations require CMS to monitor and assess the MAOs' operations and independent contractor performances regarding beneficiary appeals. The OIG will determine whether MAOs and independent contractors have fulfilled their appeal review requirements to beneficiaries.
Marketing by Sales Agents. The OIG plans to focus on the marketing of MA plans by MAO-contracted sales agents. There have been beneficiary complaints about MAOs' marketing practices, even since the passage of federal law that ostensibly codified portions of the CMS marketing guidelines. For example, door-to-door solicitation and telemarketing were prohibited by law. The OIG will determine whether beneficiaries have continued to complain about abusive marketing practices post implementation of the new law and how MAOs have worked to comply.
Oversight of Contractors. The OIG will monitor MAOs' oversight of their first-tier and downstream entities' compliance with fraud, waste, and abuse prevention compliance. An MAO that delegates its responsibilities to another entity under its CMS contract must include in its contract with that downstream entity provisions specifying compliance with all applicable law.
Medicare Part D
In monitoring Plan Sponsors, the OIG has identified a variety of areas it plans to review this year.
Duplicate Claims in Part A and B. The OIG plans to review claims submitted to Plan Sponsors for payment under Part D to determine whether the claims were duplicative of claims in Part A or B. Medicare Parts A and B do not cover most outpatient prescription drugs covered under Part D. The OIG also will determine the extent to which payments for sample Part D claims were correct and supported.
Data Submitted for Reconciliations. The OIG indicates that reconciliation calculations and the data submitted by sponsors for reconciliation are significant areas of concern. The OIG will determine the accuracy of prescription drug event (PDE) data and direct and indirect remunerations data reported by Plan Sponsors. This reported information should include discounts, charge backs or rebates, cash discounts, free goods contingent upon a purchase agreement, up-front payments, coupons, goods in kind, free or reduced price services, grants, or other price concessions.
Plan Sponsors' Internal Controls for Fraud, Waste, and Abuse, Including Audits of Financial Records and Sponsor Audits of Pharmacies. The OIG will review the reliability of Plan Sponsors' internal controls to guard against fraud, waste, and abuse. The CMS issued additional guidance to Part D sponsors in its Prescription Drug Benefit Manual that provides both rules and guidelines for implementing the regulatory requirements for fraud, waste, and abuse prevention. The OIG plans to audit Part D sponsors' financial records to determine whether they were implemented as expected. The OIG also plans to review Plan Sponsors' audits of pharmacies that contract with them to validate payments by the Plan Sponsor to the pharmacy and to determine whether Plan Sponsors properly accounted for recoveries.
Oversight of Pharmacy Benefit Managers (PBMs). The OIG has plans for closer review of how Plan Sponsors oversee the PBMs with which they contract. Specifically, the OIG will determine whether Plan Sponsor contracts with PBMs include provisions for auditing and fraud, waste, and abuse prevention.
Manufacturer Rebates and Costs Paid Under Generic Programs. Payments made to Plan Sponsors by the government are based on amounts actually paid by the sponsors minus all rebates, subsidies, and other price concessions. The OIG plans to identify rebate amounts negotiated between Plan Sponsors and pharmaceutical manufacturers and compare the data with actual rebates paid to unearth possible discrepancies. The OIG also has indicated that it will review drug costs paid by Plan Sponsors under retail discount generic programs to see if the contracted prices were accurately reflected.
Hospital Outlier Payments. The OIG will follow up on its previous efforts to review state Medicaid payments for hospital outliers, which are cases that incur extraordinarily high costs. Prior OIG work involving Medicare claims for hospital outliers identified vulnerabilities in the Medicare payment methodology. The OIG seeks to determine whether similar vulnerabilities exist in state Medicaid agencies' methods of computing inpatient hospital cost outlier payments.
Provider Eligibility for Medicaid Reimbursement. The OIG will continue to review whether states appropriately determined provider eligibility for Medicaid reimbursement (i.e., compliance with Medicare Conditions of Participation). The OIG previously identified significant unallowable Medicaid payments made to hospitals that did not meet Medicare program eligibility requirements as part of the DSH program.
Potentially Excessive Medicaid Payments for Inpatient and Outpatient Services. Again, the OIG has expanded its review of Medicare inpatient and outpatient claims to Medicaid. The review will focus on whether vulnerabilities exist in state agency controls to detect potentially excessive Medicaid payments to institutional providers for inpatient and outpatient services. Excessive payments may be attributable to billing errors on the submitted claims such as inaccuracies in the diagnosis codes, admission codes, discharge codes, procedure codes, charges, Healthcare Common Procedure Coding System (HCPCS) codes, and number of units billed.
Medicaid Disproportionate Share Hospital Payments. The OIG has noted the increased DSH payments authorized by the Recovery Act. It will review DSH payments to determine whether expenditures were claimed in accordance with Medicaid requirements.
Medicaid Home, Community, and Nursing Home Care
The oversight of Medicaid home, community, and nursing home facilities in the Plan represents a continuation of most of the programs described in the FY 2009 OIG Work Plan and introduces a few new areas of focus.
Appropriateness of Medicaid Payments. The OIG will review whether states have appropriately claimed federal financial participation for the following services: community residence rehabilitation services; targeted case management services; personal care services; and home health services covered by the Medicare program. In addition, OIG will review whether erroneous Medicaid payments have been made to HHA providers and personal care services attendants who do not comply with applicable requirements to provide such services.
Home- and Community-Based Services (HCBS). The OIG will review state and federal oversight of HCBS waiver programs. In particular, the OIG will focus on whether adequate safeguards are in place with respect to services provided by assisted-living facilities, and on the appropriateness of Medicaid payments for adult day health services provided through HCBS waiver programs. Additionally, the OIG will review the reasonableness of HCBS waiver program administrative costs.
Nursing Home Care. The OIG is continuing its focus on quality issues concerning nursing home care, including the following:
- Identification of nursing facilities that may have provided substandard care resulting in or contributing to beneficiaries' subsequent hospital admissions
- Review of states' oversight and implementation of nursing facility incentive payments to determine whether sufficient controls are in place to assess quality of care performance measures and to ensure the appropriateness of the incentive payments R
- eview of ownership structures at investor-owned nursing homes to determine which entities are benefiting from Medicaid reimbursement and to study the effects of ownership changes on the quality of care provided to beneficiaries
- Review of CMS oversight of the Minimum Data Set (MDS) data submitted by nursing homes, which are used to conduct comprehensive assessments for nursing home residents and provide quality performance information to ensure that the data submitted are accurate and complete
- Review of states' administration and use of civil monetary penalties (CMP) imposed on nursing homes for failure to meet health and safety requirements, and the policies and procedures regarding the appropriate use of the CMP funds received in accordance with federal requirements
Medicaid Prescription Drugs
This year's Plan describes a number of ongoing and new projects related to Medicaid payments for prescription drugs. Some of the projects touch on manufacturer issues such as submission of drug pricing data, whereas others are directed at retail pharmacies or the state Medicaid programs themselves.
Federal Upper Payment Limit Drugs. This new audit is examining whether pharmacies have provided different dosage forms for certain drugs to allegedly avoid federal upper limits for multiple-source drugs. The audit was spurred by qui tam cases that alleged this conduct resulted in inflated reimbursement.
Medicaid Payments for Drugs Not Approved for Use by Children. This project is a new OAS audit will look at whether Medicaid and Children's Health Insurance Program have been paying for drugs not approved by the FDA for the use by children.
Medicaid Third-Party Liability for Prescription Drug Payments. This ongoing audit is reviewing whether states have implemented adequate controls to ensure that Medicaid is the payor of last resort and is not used if other available sources of payment, either through payors or otherwise, are available.
Deficit Reduction Act (DRA): Impact on Medicaid Rebates for Authorized Generic Drugs. This significant new project is evaluating the extent to which manufacturers have complied with requirements to include prices available to secondary manufacturers of authorized generic drugs in their best price calculations. DRA imposed this requirement, which has the potential to increase the amount of Medicaid rebates and the affect of the DRA requirements on the number of new authorized generics available on the market.
Medicaid Claims for Drugs Purchased Under Retail Discount Generic Programs. This new evaluation is examining the extent to which retail pharmacies are billing the usual and customary charges for drugs provided under discount generic programs. These programs offer selected generic drugs for very low costs such as $4 per one-month prescription. The study will focus on whether Medicaid is being billed properly for these types of prescriptions.
Other Medicaid Services
Medicaid Overpayments. The OIG will review Medicaid payments to determine whether states have properly claimed federal financial participation for the following services: dental services; family planning; transportation services; rehabilitative services; physical and occupational therapy services; and services provided to undocumented aliens. In general, the OIG is continuing its review in these areas because prior reviews have found instances of improper claims for such services.
Payments to Terminated / Excluded Providers. The OIG will review payments made to providers and suppliers to determine the extent to which they were paid during periods of termination or exclusion from the Medicaid program. In addition, the OIG will determine the extent to which states have controls in place to identify claims associated with invalid or inactive physician identifier numbers (UPINs). The OIG also will be looking at issues related to Enrollment of Excluded Medicaid Providers in an ongoing evaluation.
Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) Services for Children. The OIG will conduct a study of the extent to which Medicaid-eligible children receive appropriate EPSDT services and the efforts by the states to increase participation in EPSDT screenings.
Health Insurance Portability and Accountability Act (HIPAA) and Health Information Technology for Economic and Clinical Health (HITECH) Act
Security of Portable Devices Containing Protected Health Information at Contractors and Hospitals. The OIG will review security controls implemented by Medicare and Medicaid contractors and hospitals to prevent the loss of protected health information stored on portable devices and media such as laptops, jump drives, and backup tapes. The OIG noted this review is in response to breaches that have recently occurred involving federal government computers, including one involving a CMS contractor. As part of this review, the OIG will assess and test the policies and procedures of contractors and hospitals related to protection, access, transport, and storage of electronic protected health information.
Medicare and Medicaid Health Information Data Privacy. The OIG will review Medicare and Medicaid program covered entity providers' compliance with the HIPAA Privacy Rule requirements. The Office for Civil Rights (OCR) within the HHS is responsible for overseeing compliance with and enforcement of the HIPAA Privacy Rule; the OIG also will review the adequacy of OCR's oversight of this rule.
Breach Notification and Medical Identity Theft in Medicare. The HITECH Act, which was enacted as part of the Recovery Act, requires HIPAA-covered entities to notify affected individuals of breaches involving their protected health information. (See Foley's alert on this topic: http://www.foley.com/publications/pub_detail.aspx?pubid=6341) The OIG notes that such breaches can facilitate medical identity theft. The OIG will review CMS's compliance with the HITECH Act's new security-breach notification requirements as well as the adequacy of CMS' oversight measures in cases of medical identity theft within Medicare. The OIG's review will include an examination of CMS' internal procedures and processes related to the new security breach notification requirements as well as CMS's oversight of its contractors, plans, and sponsors and their efforts to deter security breaches and comply with notification requirements.
Electronic Health Records (EHR)
Over the past several years, there has been an increasing emphasis on the adoption of EHR technology by physicians, hospitals, and other health care providers. The Recovery Act contains significant financial incentives under Medicare and Medicaid to facilitate the “meaningful use” of certified EHR technology by providers. (For more information, please see Foley's EHR Resource Page: Foley.com/ehr.) As further evidence of the push for the adoption of EHR technology, the OIG and CMS promulgated Anti-Kickback Statute and Stark Law regulations to allow hospitals and other health care providers to subsidize the provision of EHR technology to physicians, provided that certain conditions are met. Against this backdrop of significant financial incentives related to EHR technology, the Plan contains several initiatives by which OIG will review and confirm the appropriateness of payments made under the Recovery Act.
Medicare Incentive Payments for EHR. The OIG will review the appropriateness of these payments and CMS' safeguards to prevent payments made in error. The Congressional Budget Office (CBO) estimates that Medicare payments and financial penalties (in the form of reductions in payments to health care professionals who fail to become “meaningful users” by 2015) will total approximately $18 billion between 2011 and 2019. If payment errors are identified, the OIG will evaluate CMS's plans to remedy such errors and its strategies for recovering the erroneous payments.
Medicaid Incentive Payments for EHR. The OIG will review the Recovery Act's Medicaid incentive payments to hospitals and physicians and CMS's safeguards against payments made in error. The CBO estimates that Medicaid incentive payments under the Recovery Act will total approximately $12 billion between 2011 and 2019. The OIG will review 2011 incentive payments for a “selection of states” to determine whether payment mistakes were made. If payment errors are identified, the OIG will evaluate CMS's plans to remedy such errors and its strategies for recovering the erroneous payments.
Early Assessment of CMS Oversight of Recovery Act Incentives for EHR. Although the Recovery Act provides financial incentives for the adoption of EHR technology under the Medicare and Medicaid programs, eligible health care professionals are not permitted to receive incentive payments under both programs. The OIG will review CMS's implementation of the Recovery Act's Medicare and Medicaid EHR financial incentives and its procedures for preventing duplicate payments. OIG also will evaluate whether CMS has established adequate fiscal oversight and reporting mechanisms in order to determine the meaningful use of EHR technology.
Health Information Technology System Enhancements. Given CMS's role in administering the Recovery Act incentive payments, its systems will require modifications to carry out this responsibility. OIG will review CMS' health information technology enhancements to ensure that they reflect HHS' standards and contain proper controls to protect personal information and EHR.
Investigative and Legal Activities
This section of the Plan highlights activities of two additional OIG components, the Office of Investigations (OI) and the Office of Counsel to the Inspector General (OCIG). Because much of the work of these branches is reactive (for example, in response to complaints coming in through the OIG hotline), and because of the nature of the work (investigating criminal matters or sealed qui tam cases) OI and OCIG do not provide the type of detailed work plan descriptions that OAS and OEI do. A few investigative priorities are, however identified in the report. These include investigations related to the Medicare Part D drug benefit, Medicare Strike Force work related to fraudulent DME claims, quality of care in nursing facilities, and coordination with the National Association of Medicaid Fraud Control Units and others with respect to Medicaid false claims.
Complaint Investigation Process. The FDA uses a complaint investigation process as a key mechanism to identify contaminated drugs, biologics, and medical devices. The OIG intends to examine the adequacy of this process in order to determine whether complaints are properly recorded in the Consumer Complaint System and investigated in an expeditious manner. The OIG also will review the FDA process for categorizing and using complaints to identify trends and patterns in reported illnesses or injuries.
Foreign Clinical Trials. Manufacturers are permitted to use data from foreign clinical trials to support new drug applications (NDA) and biological licensing agreements (BLA), provided such trials meet criteria related to the qualification of clinical investigators and participating sights. The OIG will review the extent to which manufacturers use foreign clinical trials in support of such NDAs and BLAs and will examine how FDA reviews the foreign clinical trial data submitted by such manufacturers.
Oversight of Investigational New Drug Applications. Drug sponsors submit investigational new drug (IND) applications to the FDA for review and approval prior to commencing clinical trials to investigate the safety and effectiveness of new drugs. If, within 30 days following receipt of an IND by the FDA, the FDA has failed to respond, the sponsor may commence clinical trials without FDA's approval. The OIG will review FDA's timeliness of IND review and identify challenges in the IND review process.
Oversight of Blood Establishments. The FDA is charged with ensuring the safety of the nation's blood supply by overseeing blood establishments. All licensed and unlicensed (registered) blood establishments are required to report deviations in product manufacturing of distributed products to the FDA within a 45-day period. The OIG will review the level of FDA's oversight of blood establishments and will determine whether the FDA's inspections of licensed blood establishments and monitoring of blood product deviations meet statutory requirements.
Public Health Issues
Pandemic Influenza Planning. The OIG will review HHS' implementation of high-risk areas of the HHS' pandemic influenza plan. The pandemic influenza plan is HHS' blueprint for responding to the next pandemic that has the potential to overwhelm current public health and medical care capabilities. HHS will review areas pertaining to appropriate morbidity and mortality rates; supplies of pre-pandemic vaccines, post-pandemic vaccines, and antivirals; reliance on vaccine policies; and vaccine and antiviral distribution. HHS also will assess the extent to which states are reporting and meeting performance goals.
The OIG has established an ambitious plan of audits and evaluations for the upcoming fiscal year. Some clear themes emerge: quality of care continues to be an ongoing focus of the government's reviews, as is the Medicare Part D drug benefit, DME claims, and Medicaid integrity program issues. At the same time, a new focus on EHR and security-breach issues has emerged as a result of the HITECH Act and the provision of stimulus funds through the Recovery Act.