The Department of Health and Human Services Office of the Inspector General (HHS-OIG) was established by Congress in 1976 to identify and eliminate fraud, abuse, and waste in HHS programs and to promote efficiency and economy in departmental operations. The OIG is responsible for conducting audits, evaluations, and both criminal and civil investigations for all HHS agencies. These functions are performed by the OIG's Office of Audit Services (OAS).
Feeley & Driscoll's OIG Update is a compilation of the latest and greatest additions from the OIG's website, listed in approximate order of greatness rather than lateness.

A biweekly publication from the Healthcare Group at Feeley & Driscoll, P.C. This email is also accessible from the F&D website by clicking through to our OIG Updates Archive.

In this issue

1. Review of the Relationship Between Medicare Part D Payments to Local, Community Pharmacies and the Pharmacies’ Drug Acquisition Costs (A-06-07-00107)

2. Physician-Owned Specialty Hospitals’ Ability To Manage Medical Emergencies (OEI-02-06-00310)

3. Follow-Up Audit of the Medicaid Drug Rebate Program in Kansas (A-07-08-03102)

4. Review of State Children's Health Insurance Program Payments in Puerto Rico (A-02-04-01019)

5. Review of High-Dollar Payments for Oklahoma Medicare Part A Claims Processed by Chisholm Administrative Services for the Period January 1, 2003 Through December 31, 2003 (A-06-07-00090)

6. Review of Texas Physical Therapist's Medicare Claims for Therapy Services Provided During 2002 (A-06-07-00061)

1. Review of the Relationship Between Medicare Part D Payments to Local, Community Pharmacies and the Pharmacies’ Drug Acquisition Costs (A-06-07-00107)

The OIG conducted this review at the request of 33 Senators.

Medicare Part D payments, excluding dispensing fees, to local, community pharmacies exceeded the pharmacies’ drug acquisition costs by an estimated 18.1 percent when the analysis included rebates that drug wholesalers paid to pharmacies. Excluding rebates, Part D payments exceeded drug acquisition costs by an estimated 17.3 percent. The estimated difference between Part D payments and drug acquisition costs was $9.13 per prescription including rebates and $8.78 excluding rebates.

The estimated average Medicare Part D dispensing fee paid to local, community pharmacies was $2.27 per prescription, about $2 less than the average Medicaid dispensing fee. The OIG recommended that Congress and CMS consider the results of the OIG’s review, including the data provided, in any deliberations regarding Medicare Part D reimbursement. CMS concurred with the recommendation.

> Click here to view the full report

2. Physician-Owned Specialty Hospitals’ Ability To Manage Medical Emergencies (OEI-02-06-00310)

This final report provides an assessment of physician-owned specialty hospitals’ ability to manage medical emergencies. The study was based on data from 109 physician-owned specialty hospitals and relies on a review of staffing schedules for nurses and physicians for 8 sampled days, a review of hospitals’ staffing policies, a review of policies for managing medical emergencies, and interviews with hospital administrators.

The OIG found that about half of all physician-owned specialty hospitals have emergency departments, the majority of which have only one emergency bed. Not all hospitals had nurses on duty and physicians on call during the 8 sampled days. Less than one-third of administrators report having physicians onsite at all times. In addition, two-thirds of hospitals use 9-1-1 as part of their emergency response procedures. Lastly, some hospitals lack basic information in their written policies about managing medical emergencies.

The OIG recommend that CMS strengthen its monitoring of physician-owned specialty hospitals. To do this, CMS should develop a system to identify and regularly track these hospitals. Also, the OIG recommend that CMS ensure that hospitals meet the current Medicare Conditions of Participation that require a registered nurse to be on duty 24 hours a day, 7 days a week and a physician to be on call if one is not onsite. Additionally, CMS should ensure that hospitals have the ability to provide for the appraisal and initial treatment of emergencies and that they are not relying on 9-1-1 as a substitute for their own ability to provide these services. Finally, the OIG recommend that CMS require hospitals to include necessary information in their written policies for managing a medical emergency. CMS concurred with all four of the OIG’s recommendations.

> Click here to view the full report

3. Follow-Up Audit of the Medicaid Drug Rebate Program in Kansas (A-07-08-03102)

The Kansas Health Policy Authority (the State agency) implemented policies or procedures to resolve the recommendations made in the OIG’s previous audit of the Kansas drug rebate program (A-07-03-04017). Additionally, the State agency established controls over collecting rebates on single source drugs administered by physicians. This report contains no recommendations.

> Click here to view the full report

4. Review of State Children's Health Insurance Program Payments in Puerto Rico (A-02-04-01019)

The Health Department overstated State Children's Health Insurance Program (SCHIP) expenditures on its fiscal year (FY) 2002 CMS 64.21U report by $28,301,865 (Federal share $18,396,212). Despite the reporting error, the overstatement did not have a financial impact on Federal funds. In addition, contrary to Federal regulations, the Health Department retained SCHIP expenditure data for as little as 6 months. Nothing came to the OIG’s attention to indicate that improper SCHIP payments were made because of missing documentation.

The OIG recommended that the Health Department: (1) reduce expenditures reported on the FY 2002 CMS 64.21U by $28,301,865 (Federal share $18,396,212), (2) establish procedures to reconcile SCHIP expenditures on its CMS 64.21U reports to the Commonwealth's Medicaid Development Information System to prevent any future overstatements, and (3) implement procedures for retaining records that comply with Federal regulations. The Health Department concurred with the OIG’s findings and recommendations.

> Click here to view the full report

5. Review of High-Dollar Payments for Oklahoma Medicare Part A Claims Processed by Chisholm Administrative Services for the Period January 1, 2003 Through December 31, 2003 (A-06-07-00090)

The objective of this review was to determine whether high-dollar Medicare payments that Chisholm Administrative Services made to providers for inpatient services for calendar year 2003were appropriate. The high-dollar Medicare inpatient payments made in 2003 were appropriate. As a result, this report contains no recommendations.

> Click here to view the full report

6. Review of Texas Physical Therapist's Medicare Claims for Therapy Services Provided During 2002 (A-06-07-00061)

The objective of this review was to determine whether therapy services provided by a Texas physical therapist during calendar year 2002 met Medicare reimbursement requirements. None of the sampled claims met Medicare's reimbursement requirements. In total, 688 of the 702 services documented in 97 claims did not meet one or more of Medicare's reimbursement requirements. The physical therapist did not have a thorough understanding of Medicare requirements and did not have effective policies and procedures to ensure that he billed Medicare only for services that met Medicare requirements. As a result, the physical therapist improperly billed Medicare and received $12,652 for the 688 services.

The OIG recommended that the physical therapist refund to the Medicare program $281,325 in unallowable payments for therapy services provided in 2002 and develop quality control procedures to ensure that therapy services are provided and documented in accordance with Medicare reimbursement requirements. The physical therapist did not agree with the OIG’s findings and recommendations.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region6/60700061.pdf

> Click here to view the full report

For the List of Excluded Individuals/Entities (LEIE), follow this link:
http://oig.hhs.gov/fraud/exclusions/listofexcluded.html

For the index of recent they Advisory Opinions, follow this link: http://oig.hhs.gov/fraud/advisoryopinions/opinions.html

To see "Frequently Asked Questions" (FAQs) on the OIG Advisory Opinion process, go here: http://oig.hhs.gov/fraud/advisoryopinions/aofaq.html