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 Medicaid Outpatient Drug Expenditures in Colorado for the Period October 1, 2002, Through September 30, 2004 (A-07-07-04113)

2. Audit of Medicare Administrative Costs Claimed by Blue Cross Blue Shield of Arizona for the Period October 1, 2004, Through September 30, 2006 (A-09-07-00072)

3. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Missouri and Kansas for July 1, 2005, Through June 30, 2006 - Missouri Department of Social Services (A-07-07-04078)

4. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Kansas and Missouri for July 1, 2005, Through June 30, 2006 (A-07-07-04079)

5. Review of New Jersey's Medicaid School-Based Rates (A-02-04-01017)

6. Follow-Up Audit of the Medicaid Drug Rebate Program in Oklahoma (A-06-07-00069)

7. Follow-Up Audit of the Medicaid Drug Rebate Program in Missouri (A-07-07-03096)

1. Review of Medicaid Outpatient Drug Expenditures in Colorado for the Period October 1, 2002, Through September 30, 2004 (A-07-07-04113)

The OIG’s objective was to determine whether the Colorado Department of Health Care Policy and Financing's (the State agency) claims for reimbursement of Medicaid outpatient drug expenditures complied with Federal requirements.

The State agency's claims for reimbursement of Medicaid outpatient drug expenditures for fiscal years 2003 and 2004 did not fully comply with Federal requirements. Of the $489 million ($255 million Federal share) claimed, $21,678 (Federal share) represents expenditures for drug products that were not eligible for Medicaid coverage because they were terminated drugs for which the termination dates were listed on the CMS quarterly drug tapes before the drugs were dispensed. An additional $459,604 (Federal share) represents expenditures for drug products that were not listed on the quarterly drug tapes. Because the State agency did not verify whether the drugs missing from the tapes were eligible for Medicaid coverage, these drug expenditures may not be allowable for Medicaid reimbursement.

The OIG recommended that the State agency (1) refund $21,678 to the Federal Government for drug expenditures that were not eligible for Medicaid coverage, (2) work with CMS to resolve $459,604 in payments for drugs that were not listed on the quarterly drug tapes and that may not have been eligible for Medicaid coverage, and (3) strengthen internal controls to ensure that claimed Medicaid drug expenditures comply with Federal requirements. The State agency concurred with the OIG’s first recommendation, did not concur with the OIG’s second recommendation, and partially concurred with the OIG’s third recommendation.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70704113.pdf

2. Audit of Medicare Administrative Costs Claimed by Blue Cross Blue Shield of Arizona for the Period October 1, 2004, Through September 30, 2006 (A-09-07-00072)

The OIG’s objective was to determine whether the administrative costs that Blue Cross Blue Shield of Arizona (Arizona) claimed in its Final Administrative Cost Proposals were allowable, allocable, and reasonable in accordance with part 31 of the Federal Acquisition Regulation and the Medicare contract. Of the $13,944,069 claimed by Arizona, $13,234,541 was allowable, allocable, and reasonable. The remaining $709,528 represents pension costs that the OIG did not audit; the OIG plans to review these costs in a separate audit. Consequently, this report contains no recommendations.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region9/90700072.pdf

3. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Missouri and Kansas for July 1, 2005, Through June 30, 2006 - Missouri Department of Social Services (A-07-07-04078)

The objective of the OIG’s review was to determine whether the Missouri Department of Social Services (the State agency) made payments on behalf of beneficiaries who should not have been Medicaid-eligible due to their eligibility in Kansas. For the period of July 1, 2005, through June 30, 2006, the OIG estimates that the State agency paid $82,602 ($50,994 Federal share) on behalf of beneficiaries who should not have been eligible due to their Medicaid eligibility in Kansas. The OIG attributes the Medicaid payments made on behalf of beneficiaries who were not eligible in Missouri to the insufficient sharing of eligibility data between the State agency and Kansas's Medicaid agency.

The OIG recommend that the State agency work with the Kansas 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 $82,602 ($50,994 Federal share), made on behalf of beneficiaries residing in Kansas. The State agency concurred with the OIG’s first recommendation but not the OIG’s second recommendation.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70704078.pdf

4. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in Kansas and Missouri for July 1, 2005, Through June 30, 2006 (A-07-07-04079)

The objective of the OIG’s review was to determine whether the Kansas State agency made payments on behalf of beneficiaries who should not have been Medicaid-eligible due to their eligibility in Missouri. For the period of July 1, 2005, through June 30, 2006, the OIG estimate that the State agency paid $113,887 ($68,970 Federal share) on behalf of beneficiaries who should not have been eligible due to their Medicaid eligibility in Missouri. The OIG attribute the Medicaid payments made on behalf of beneficiaries who were not eligible in Kansas to the insufficient sharing of eligibility data between the State agency and Missouri's Medicaid agency.

The OIG recommend that the State agency work with the Missouri 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 $113,887 ($68,970 Federal share), made on behalf of beneficiaries residing in Missouri. The State agency concurred with the OIG’s recommendations.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70704079.pdf

5. Review of New Jersey's Medicaid School-Based Rates (A-02-04-01017)

New Jersey claimed Medicaid reimbursement for health-related services through a program called the Special Education Medicaid Initiative (SEMI) program. The State also claimed Medicaid reimbursement for administrative costs through a program called the Medicaid Administrative Claiming (MAC) program. The rates used by the State to claim Medicaid reimbursement under the SEMI and MAC programs were not reasonable and did not comply with Federal requirements and the Medicaid State plan. The SEMI and MAC rate-setting methodologies included costs that were duplicated, unallowable, or improperly allocated. As a result, the State improperly received Federal Medicaid payments during the period July 1, 1998, through June 30, 2001.

These improper payments were not quantified because a prior Office of Inspector General audit report (A-02-03-01003) questioned school-based claims billed by New Jersey for the same period. The OIG recommended that the State work with the Centers for Medicare & Medicaid Services to determine the overpayment amounts and return those overpayments to the Federal Government and that it properly develop and document its school-based rates. New Jersey concurred with the OIG’s findings and recommendations.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region2/20401017.pdf

6. Follow-Up Audit of the Medicaid Drug Rebate Program in Oklahoma (A-06-07-00069)

The objectives of this audit were to determine whether the State agency had implemented the recommendations made in the OIG’s previous audit of the Oklahoma drug rebate program and established controls over the drug rebate program, including the collection of rebates on single source drugs administered by physicians. The State agency implemented the recommendations from the OIG’s prior audit that related to the inaccurate accounts receivable data that was transferred from the prior system to the current system. The State agency established controls over the drug rebate program, including the collection of rebates on single source drugs administered by physicians. Therefore, the OIG did not offer any recommendations.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region6/60700069.pdf

7. Follow-Up Audit of the Medicaid Drug Rebate Program in Missouri (A-07-07-03096)

The OIG’s objectives were to determine whether the State agency had (1) implemented the recommendations made in the OIG’s previous audit of the Missouri drug rebate program and (2) established controls over collecting rebates on single source drugs administered by physicians. The OIG found that the State agency had established controls over collecting rebates on single source drugs administered by physicians. However, the State agency had not covered all the weaknesses identified in the OIG’s previous audit.

The OIG recommended that the State agency (1) develop policies and procedures to reconcile the general ledger control account to the subsidiary ledgers/records and to the Form CMS-64.9R; (2) develop policies and procedures to identify the State agency's dispute resolution process, including policies and procedures to offer a State hearing mechanism to manufacturers in order to settle disputes; and (3) determine the actual accounts receivable balance as of June 30, 2006, and amend the Form CMS-64.9R to include all outstanding rebate balances. The State agency generally agreed with the OIG’s findings and recommendations.

> To read the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70703096.pdf

> 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