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 New Jersey Medicaid Contingency Fee Contract Payments for the Period April 1, 1996, Through June 30, 2001 (A-02-06-01006)
2. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Illinois and Indiana for July 1, 2005, Through June 30, 2006 - Illinois Department of Healthcare and Family Services (A-05-06-00069)
3. OIG Posts Corporate Integrity Agreement (CIA) with Merck & Co, Inc.
4. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Indiana and Illinois for July 1, 2005, Through June 30, 2006 - Indiana Family and Social Services Administration (A-05-06-00070)
5. Review of Retiree Drug Subsidy Plan Sponsor Blue Cross Blue Shield of Massachusetts, Inc., for Plan Year Ended December 31, 2006 (A-01-07-00603)
6. Review of Kansas's Medicaid Payments for Targeted Case Management for the Period July 1, 2000, Through June 30, 2003 (A-07-06-03074)
7. Review of UMass Memorial Medical Center's Reported Fiscal Year 2006 Wage Data (A-01-07-00509)
8. Payments for Outpatient Hospital, Laboratory, and Radiology Services Made on Behalf of Beneficiaries in Skilled Nursing Facility Stays Covered Under Medicare Part A (A-01-06-00503)
9. Review of Medicare Payments to iCare Medical Supply for Home Blood-Glucose Test Strip and Lancet Supplies (A-09-05-00063)

1. Review of New Jersey Medicaid Contingency Fee Contract Payments for the Period April 1, 1996, Through June 30, 2001 (A-02-06-01006)
New Jersey awarded contingency fee contracts to Deloitte Consulting LLP (Deloitte) and Health Care Resources, Inc. (HCR), to generate increased Federal reimbursement by identifying and submitting to the Federal Government unclaimed State expenses.  According to the terms of the contracts, Deloitte and HCR were paid fees contingent on additional Federal funds recovered.  As a result of work performed, the State paid $21,017,894 of contingency fees to Deloitte ($19,681,538) and HCR ($1,336,356). 

The State improperly claimed $15,956,556 ($7,978,278 Federal share) in contingency fees.  Pursuant to Office of Management and Budget Circular A-87, States may charge contingency fees when reasonable in relation to the services provided and when not contingent on recovery of the costs from the Federal Government.  The OIG recommended that the State refund $7,978,278 to the Federal Government.  The State disagreed. 

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region2/20601006.pdf

2. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Illinois and Indiana for July 1, 2005, Through June 30, 2006 - Illinois Department of Healthcare and Family Services (A-05-06-00069)
The objective of the OIG’s review was to determine whether the Illinois Department of Healthcare and Family Services (the State agency) made payments on behalf of beneficiaries who should not have been Medicaid-eligible due to their eligibility in Indiana.  For the period July 1, 2005, through June 30, 2006, the OIG estimates that the State agency paid $408,841 ($204,420 Federal share) for Medicaid services provided to beneficiaries who should not have been eligible due to their Medicaid eligibility in Indiana.  The Medicaid payments were made on behalf of these beneficiaries because the State agency and Indiana's Medicaid agency did not share all available Medicaid eligibility information. 

The OIG recommended that the State agency work with the Indiana Medicaid agency to share available Medicaid eligibility information for use in (1) determining accurate beneficiary eligibility status and (2) reducing the amount of payments, estimated to be $408,841 ($204,420 Federal share), made on behalf of beneficiaries residing in Indiana.  The State agency agreed with the recommendations. 

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50600069.pdf

3. OIG Posts Corporate Integrity Agreement (CIA) with Merck & Co, Inc.
Merck & Company has agreed to pay more than $650 million to resolve allegations that the pharmaceutical manufacturer failed to pay proper rebates to Medicaid and other government health care programs and paid illegal remuneration to health care providers to induce them to prescribe the company’s products, the Justice Department announced today. The allegations were brought in two separate lawsuits filed by whistleblowers under the qui tam, or whistleblower, provisions of the False Claims Act.

> To view the full CIA, click here: http://www.oig.hhs.gov/fraud/cia/agreements/merck_CIA.pdf

4. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Indiana and Illinois for July 1, 2005, Through June 30, 2006 - Indiana Family and Social Services Administration (A-05-06-00070)
The objective of the OIG’s review was to determine whether the Indiana Family and Social Services Administration (the State agency) made payments on behalf of beneficiaries who should not have been Medicaid-eligible due to their eligibility in Illinois.  For the period July 1, 2005, through June 30, 2006, the OIG estimates that the State agency paid $236,578 ($148,936 Federal share) for Medicaid services provided to beneficiaries who should not have been eligible because of their Medicaid eligibility in Illinois. 

The OIG recommended that the State agency work with the Illinois Medicaid agency to share available Medicaid eligibility information for use in (1) determining accurate beneficiary eligibility status and (2) reducing the amount of payments, estimated to be $236,578 ($148,936 Federal share), made on behalf of beneficiaries residing in Illinois.  The State agency agreed with the recommendations. 

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50600070.pdf

5. Review of Retiree Drug Subsidy Plan Sponsor Blue Cross Blue Shield of Massachusetts, Inc., for Plan Year Ended December 31, 2006 (A-01-07-00603)
Under the Retiree Drug Subsidy program, the Centers for Medicare & Medicaid Services makes subsidy payments to employer and union sponsors of qualified retiree prescription drug plans.  Blue Cross Blue Shield of Massachusetts, Inc.'s employment-based retiree health coverage met the requirements to be considered a qualified retiree prescription drug plan.  However, Blue Cross Blue Shield did not establish sufficient controls to prevent incorrect retiree drug costs from being reported under the program.  Using a judgmental sample that contained retirees at high risk of having overstated costs, the OIG found that Blue Cross Blue Shield had overstated costs by $12,798 for 6 of the 50 retirees sampled.  In addition, Blue Cross Blue Shield did not establish adequate administrative safeguards over retiree data.

The OIG recommended that Blue Cross Blue Shield (1) revise its 2006 plan year cost report at reconciliation to eliminate the $12,798 in overstated costs, (2) work with its vendor to ensure that all costs that its vendor submitted for plan year 2006 were incurred for qualifying covered retirees within both the retiree's plan coverage dates and the approved subsidy period, (3) establish procedures to ensure that costs that its vendor submits in future years are incurred for qualifying covered retirees within both the retiree's plan coverage dates and the approved subsidy period, and (4) follow the Centers for Medicare & Medicaid Services' procedures to ensure that only eligible employees have access to the Retiree Drug Subsidy program secure website.  Blue Cross Blue Shield agreed with the OIG’s findings and recommendations.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region1/10700603.pdf

6. Review of Kansas's Medicaid Payments for Targeted Case Management for the Period July 1, 2000, Through June 30, 2003 (A-07-06-03074)
The Kansas Department of Social and Rehabilitation Services (the State agency) did not assure that its $61,765,693 ($37,178,661 Federal share) claim for targeted case management (TCM) services was equal to or less than the limit specified in the State plan.  Without such assurance-supported with auditable documentation - the OIG was unable to express an opinion on the reasonableness of the State agency's claim for reimbursement on the Centers for Medicare and Medicaid Services (CMS) Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program reports.

The OIG recommended that the State agency (1) work with CMS to determine the allowability of the $61,765,693 ($37,178,661 Federal share) for the audit period of State fiscal years 2001 through 2003 and all subsequent periods and (2) strengthen internal controls to ensure that State plan requirements are followed in submitting future TCM claims.  The State agency concurred with the first recommendation and did not directly address the second recommendation.  (January 18, 2008)

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70603074.pdf

7. Review of UMass Memorial Medical Center's Reported Fiscal Year 2006 Wage Data (A-01-07-00509)
UMass Memorial Medical Center (the Hospital) did not fully comply with Medicare requirements for reporting wage data in its FY 2006 Medicare cost report.  Specifically, the Hospital overstated its wages by $13,408,945 and 139,916 hours.  The OIG’s correction of the Hospital's errors decreased the average hourly wage rate approximately 2 percent.  The errors occurred because the Hospital did not sufficiently review and reconcile wage data to ensure that all amounts reported were accurate, supportable, and in compliance with Medicare requirements. 

The OIG recommended that the Hospital (1) submit a revised FY 2006 Medicare cost report to the fiscal intermediary to correct the wage data overstatements totaling $13,408,945 and 139,916 hours and (2) implement review and reconciliation procedures to ensure that the wage data reported in future Medicare cost reports are accurate, supportable, and in compliance with Medicare requirements.  The Hospital did not agree with all of the OIG’s findings.  Nevertheless, the Hospital stated that it would resubmit its Medicare cost report.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region1/10700509.pdf

8. Payments for Outpatient Hospital, Laboratory, and Radiology Services Made on Behalf of Beneficiaries in Skilled Nursing Facility Stays Covered Under Medicare Part A (A-01-06-00503) 
For calendar years (CY) 2001 and 2002, Medicare Part B made a total of $106.9 million in potential overpayments to suppliers of outpatient hospital, laboratory, and radiology services on behalf of beneficiaries in Part A-covered skilled nursing facility stays.  These potential overpayments occurred because CMS did not have Common Working File (CWF) edits in place during most of this period.  For CY 2003, when the edits were fully implemented, potential overpayments were reduced to $22.7 million.  The OIG estimated that the fiscal intermediaries and carriers had not recovered $17.9 million of these potential overpayments.

The OIG recommended that CMS (1) direct the fiscal intermediaries and carriers to review the $106.9 million in potential overpayments for CYs 2001 and 2002 and make appropriate recoveries, (2) direct the fiscal intermediaries and carriers to initiate recovery of the estimated $17.9 million in unrecovered overpayments for CY 2003, (3) continue to test and refine the CWF edits to ensure that they properly identify claims subject to consolidated billing, and (4) ensure that all fiscal intermediaries and carriers have established proper controls to recover overpayments that the CWF edits identify.  CMS agreed with the recommendations. 

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region1/10600503.pdf

9. Review of Medicare Payments to iCare Medical Supply for Home Blood-Glucose Test Strip and Lancet Supplies (A-09-05-00063)
iCare Medical Supply, Inc. (iCare), did not claim reimbursement for test strips and lancets in accordance with Medicare requirements.  Medical reviewers found that none of iCare's claims for the 100 sampled beneficiaries met Medicare requirements and that each service line item on each claim had one or more errors.  These errors occurred because iCare did not have adequate controls to ensure that test strips and lancets billed to Medicare were medically necessary and documented in accordance with Medicare requirements.  As a result, iCare received $73,040 in unallowable Medicare payments for the 100 sampled beneficiaries.  Projecting these results to the population, the OIG estimated that at least $8,233,476 of the $8,664,874 paid to iCare for test strips and lancets provided in calendar years 2002 and 2003 was unallowable for Medicare reimbursement.

The OIG recommended that iCare refund $8,233,476 to the Medicare program and work with the Centers for Medicare & Medicaid Services to determine the allowability of test strips and lancets billed after calendar year 2003.  In its comments on the draft report, iCare did not address the recommendations.

> To view the full report, click here:
http://www.oig.hhs.gov/oas/reports/region9/90500063.pdf

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