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 Rhode Island's Medicaid Nonemergency Transportation Costs for March 1, 2004, Through May 31, 2005 (A-01-06-00007)

2. Review of Excessive Payments for Outpatient Services Processed by National Government Services in Michigan and Wisconsin for Calendar Years 2004 and 2005 (A-05-07-00066)

3. Review of Kansas's Medicaid Payments for the Family Preservation Program for the Period July 1, 2000, Through June 30, 2003 (A-07-06-03076)

4. Review of California’s Medicaid Management Information System Expenditures for the Period July 1, 2003, Through June 30, 2005 (A-09-06-00032)

5. Review of Administrative and Clerical Costs at the University of California, San Francisco, for the Period July 1, 2004, Through June 30, 2006 (A-09-07-00073)

6. Follow-up Audit of the Medicaid Drug Rebate Program in Pennsylvania (A-03-08-00201)

7. Follow-Up Audit of the Medicaid Drug Rebate Program in California (A-09-07-00084)

8. Review of Postretirement Benefit Costs Claimed for Blue Cross Blue Shield of South Carolina for Fiscal Years 2000 Through 2004 (A-07-07-00230)

9. Review of St. Peter's University Hospital's Reported Fiscal Year 2005 Wage Data (A-02-07-01047)

1. Review of Rhode Island's Medicaid Nonemergency Transportation Costs for March 1, 2004, Through May 31, 2005 (A-01-06-00007)

The State agency did not claim Medicaid nonemergency transportation (NET) costs in accordance with Federal and State requirements. Specifically, the State agency's purchase of monthly bus passes was not cost effective based on beneficiaries' use of medical services. From March 2004 through May 2005, bus pass recipients averaged 1.5 medical services per month for months in which they received a pass. The less costly purchase of 10-ride bus passes could have saved at least $9.8 million ($4.9 million Federal share) during the OIG’s 15-month audit period. In addition, the State agency's claim included the costs of approximately 8,700 bus passes for beneficiaries of two non-Medicaid State programs. As a result, the State agency overstated its claim for NET costs by $386,452 ($193,226 Federal share).

The OIG recommended that the State agency (1) either refund $4.9 million (Federal share) for NET costs claimed for monthly bus passes or provide documentation to show that the passes were the most cost-effective means of providing NET; (2) refund $193,226 (Federal share) in unallowable NET costs claimed for beneficiaries of two non-Medicaid State programs; (3) in the absence of documentation demonstrating that monthly bus passes were the most cost-effective means of providing NET to Medicaid beneficiaries, review NET costs for bus passes reimbursed after the OIG’s audit period and refund the excess NET costs to the Federal Government; and (4) establish policies and procedures to ensure that it complies with Federal requirements and the State plan for claiming NET costs. The State agency agreed with the OIG’s second recommendation but disagreed with the other recommendations. Nothing in the State's response has caused the OIG to alter their recommendations.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region1/10600007.pdf

2. Review of Excessive Payments for Outpatient Services Processed by National Government Services in Michigan and Wisconsin for Calendar Years 2004 and 2005 (A-05-07-00066)

This audit was part of a nationwide review of excessive payments for outpatient services of $50,000 or more (high-dollar payments). The OIG’s objective was to determine whether high-dollar Medicare payments that National Government Services made to hospitals for outpatient services were appropriate.

Of the 45 high-dollar payments that National Government Services made for outpatient services for calendar years (CY) 2004 and 2005, only 1 was appropriate. The remaining 44 payments included overpayments totaling $2,737,857, which the hospitals had not refunded by the beginning of the OIG’s audit. National Government Services made the overpayments because it did not have prepayment or postpayment controls to identify aberrant payments at the claim level. In addition, neither the Fiscal Intermediary Standard System nor the Common Working File had sufficient edits in place during CYs 2004 and 2005 to detect and prevent excessive payments. The OIG recommended that National Government Services recover the $2,737,857 in identified overpayments. National Government Services agreed with the OIG’s recommendation.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50700066.pdf

3. Review of Kansas's Medicaid Payments for the Family Preservation Program for the Period July 1, 2000, Through June 30, 2003 (A-07-06-03076)

The OIG’s objective was to determine whether the State agency claimed allowable Medicaid payments for family preservation services during State fiscal years (FY) 2001 through 2003 (July 1, 2000-June 30, 2003) in accordance with expenditure limitations contained in the State plan.

The State agency did not assure that its $3,376,139 ($2,030,607 Federal share) claim was equal to or less than the limit specified in the State plan. Without such assurance-supported with auditable documentation-the OIG are 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 (CMS-64) reports. The State agency's lack of internal controls was the cause of its inability to provide such assurance.

The OIG recommended that the State agency work with CMS to determine the allowability of the $3,376,139 ($2,030,607 Federal share) for the audit period of State FYs 2001 through 2003. The State agency concurred with the OIG’s recommendation.

> To view the full report, click here: http://intranet/oiginternet/oas/reports/region7/70603076.pdf

4. Review of California’s Medicaid Management Information System Expenditures for the Period July 1, 2003, Through June 30, 2005 (A-09-06-00032)

Of the $183,179,805 (Federal share) of California’s Medicaid management information system (MMIS) costs that the OIG reviewed, $180,906,594 was allowable. The remaining $2,273,211 consisted of $2,009,782 of unallowable costs that were not equitably allocated to all benefiting programs, were not related to the Medicaid program, or were claimed twice and $263,429 of postage, administrative, and subcontract costs claimed at the incorrect reimbursement rate.

The OIG recommended that the State agency (1) refund $2,273,211 to the Federal Government; (2) strengthen internal controls and procedures to ensure that MMIS costs claimed for Federal reimbursement are allowable, equitably allocated to all benefiting programs, and claimed at the correct Federal reimbursement rate; and (3) review MMIS costs claimed for Federal reimbursement after June 30, 2005, to ensure that the costs claimed were allowable, equitably allocated to all benefiting programs, and claimed at the correct Federal reimbursement rate.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region9/90600032.pdf

5. Review of Administrative and Clerical Costs at the University of California, San Francisco, for the Period July 1, 2004, Through June 30, 2006 (A-09-07-00073)

The objective of the OIG’s audit was to determine whether the University of California, San Francisco (the University) claimed reimbursement for administrative and clerical expenses as direct costs to National Institutes of Health grants, contracts, and other agreements in accordance with applicable Federal regulations. The OIG found that the University substantially complied with Federal regulations for claiming reimbursement for administrative and clerical expenses. The University made minor clerical errors in charging costs. However, University officials stated that the errors have been corrected. Consequently, the OIG’s report contains no recommendations.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region9/90700073.pdf

6. Follow-up Audit of the Medicaid Drug Rebate Program in Pennsylvania (A-03-08-00201)

The OIG’s objectives were to determine whether the Department of Public Welfare (the State agency) had (1) implemented the recommendations made in the OIG’s previous audit of the Pennsylvania drug rebate program and (2) established controls over collecting rebates on single source drugs administered by physicians.

Although the State agency did not concur with the OIG’s findings, it did implement the recommendations made in the OIG’s previous audit. The State agency introduced a new Medicaid Management Information System, the PROMISe System, which corrected the weaknesses noted in the OIG’s prior review. In addition, the State agency established controls over collecting rebates on single source drugs administered by physicians. Accordingly, the OIG has no recommendations at this time.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region3/30800201.pdf

7. Follow-Up Audit of the Medicaid Drug Rebate Program in California (A-09-07-00084)

The objectives of this audit were to determine whether the State agency had (1) implemented the recommendations made in the OIG’s previous audit of the California drug rebate program and (2) established controls over collecting rebates on single source drugs administered by physicians. The OIG found that the State agency (1) implemented the prior recommendation related to dispute resolution and (2) established controls over collecting rebates on 81 single source drugs administered by physicians. However, the State agency did not fully implement the previous recommendation regarding quarterly reporting.

The OIG recommended that the State agency ensure that the system change scheduled for implementation provides documentation to support rebate amounts reported to CMS. In written comments on the draft report, the State agency addressed the OIG’s recommendation by stating that it is working on a system change that will enable it to capture and document the data to support rebate amounts reported to CMS quarterly. The change is scheduled to be implemented by July 15, 2008.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region9/90700084.pdf

8. Review of Postretirement Benefit Costs Claimed for Blue Cross Blue Shield of South Carolina for Fiscal Years 2000 Through 2004 (A-07-07-00230)

The objective of the OIG’s review was to determine the allowability of South Carolina's post retirement benefit (PRB) costs claimed for Medicare reimbursement for fiscal years (FY) 2000 through 2004. The OIG found that South Carolina underclaimed $180,720 of accrued PRB costs for Medicare reimbursement for FYs 2000 through 2004. The OIG recommended that South Carolina revise its Final Administrative Cost Proposals for FYs 2000 through 2004 to increase its claimed PRB costs by $180,720 and claim future PRB costs in accordance with the Medicare contract. South Carolina did not completely concur with the OIG’s recommendations.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70700230.pdf

9. Review of St. Peter's University Hospital's Reported Fiscal Year 2005 Wage Data (A-02-07-01047)

St. Peter's University Hospital (the Hospital) did not fully comply with Medicare requirements for reporting wage data in its fiscal year (FY) 2005 Medicare cost report. Specifically, the Hospital understated its wage data by $572,108 and 110,107 hours. The OIG’s correction of the Hospital's errors decreased the average hourly wage rate approximately 2 percent from $36.51 to $35.76. These errors occurred because the Hospital did not sufficiently review and reconcile its reported wage data to supporting documentation to ensure that the data were accurate, supportable, and in compliance with Medicare requirements. If the Hospital does not revise the wage data in its cost report, the FY 2009 wage index for the Hospital's core-based statistical area will be overstated, which will result in overpayments to all of the hospitals that use this wage index.

The OIG recommended that the Hospital (1) submit a revised FY 2005 Medicare cost report to the fiscal intermediary to correct the wage data understatements totaling $572,108 and 110,107 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 concurred with the OIG’s findings.

> To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region2/20701047.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