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 Excessive Payments for Inpatient Services Processed by TrailBlazer Health Enterprises for the Period January 1, 2003, Through December 31, 2003 (A-06-07-00055)

2. Review of Kansas's Medicaid Payments for the Child Welfare Services Program for the Period July 1, 2000, Through June 30, 2003
(A-07-06-03079)

3. Review of High-Dollar Payments for Medicare Part A Claims Processed by TriSpan Health Services for the Period January 1, 2003, through December 31, 2003 (A-06-07-00083)

4. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in California and Arizona for July 1, 2005, Through June 30, 2006 - California Department of Health Care Services (A-05-07-00058)

5. Follow-Up Audit of the Medicaid Drug Rebate Programs

1. Review of Excessive Payments for Inpatient Services Processed by TrailBlazer Health Enterprises for the Period January 1, 2003, Through December 31, 2003 (A-06-07-00055)

Of the 147 high-dollar payments ($200,000 or more) that TrailBlazer Health Enterprises (TrailBlazer) made to Medicare Part A providers in calendar year 2003, 11 were overpayments, 8 of which resulted in net overpayments totaling $50,044.  For the remaining three overpayments, providers agreed that they had submitted incorrect claims and said that they would submit revised claims.  TrailBlazer is a fiscal intermediary serving Medicare providers in Texas, New Mexico, and Colorado.

The OIG recommended that TrailBlazer (1) ensure that identified overpayments have been recovered, (2) follow up with the providers about the three claims that had not been revised, (3) use the results of this audit in its provider education activities, and (4) consider identifying and recovering any additional overpayments made for high-dollar Part A inpatient claims paid after calendar year 2003.  TrailBlazer agreed with the OIG’s findings and stated that providers had corrected and resubmitted 10 of the 11 claims.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region6/60700055.pdf

2. Review of Kansas's Medicaid Payments for the Child Welfare Services Program for the Period July 1, 2000, Through June 30, 2003
(A-07-06-03079)

The State did not assure that its $61,371,523 ($36,943,979 Federal share) Medicaid claim for the Child Welfare Services program 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 claim.  The State's inadequate policies and procedures were the causes of its inability to provide such assurance.  The State had contracted with providers for child welfare services and paid providers on a per child basis.  The OIG conducted this audit at CMS's request.

The OIG recommended that the State (1) work with CMS to determine the allowability of the $61,371,523 ($36,943,979 Federal share) for the audit period of State FYs 2001 through 2003 and all subsequent periods and (2) strengthen policies and procedures to ensure that State plan requirements are followed in submitting future child welfare services claims.  The State agency concurred with the OIG’s first recommendation and did not directly address the OIG’s second recommendation.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70603079.pdf

3. Review of High-Dollar Payments for Medicare Part A Claims Processed by TriSpan Health Services for the Period January 1, 2003, through December 31, 2003 (A-06-07-00083)

Of the 38 payments of $200,000 or more (high-dollar payments) that TriSpan Health Services (TriSpan) made to providers for calendar year 2003, 18 were appropriate.  However, TriSpan incorrectly paid providers for 20 claims.  For 17 of the 20 claims, providers submitted revised claims that resulted in net overpayments totaling $155,990.  For the remaining three claims, providers agreed that they had submitted incorrect claims and said that they would submit revised claims. TriSpan is a Medicare Part A intermediary serving more than 1,800 Medicare providers in Mississippi, Louisiana, and Missouri.

The OIG recommended that TriSpan (1) ensure that identified overpayments have been recovered, (2) follow up with the providers about the three claims that have not been revised, (3) use the results of this audit in its provider education activities, and (4) consider identifying and recovering any additional overpayments made for high-dollar Part A inpatient claims paid after calendar year 2003.  TriSpan agreed with the OIG’s recommendations.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region6/60700083.pdf

4. Medicaid Payments for Services Provided to Beneficiaries With Concurrent Eligibility in California and Arizona for July 1, 2005, Through June 30, 2006 - California Department of Health Care Services (A-05-07-00058)

The OIG found that California made Medicaid payments on behalf of beneficiaries who should not have been eligible in California because they were eligible in Arizona.  If a resident of one State subsequently establishes residency in another State, the beneficiary's Medicaid eligibility in the previous State should end.  States' Medicaid agencies must promptly redetermine eligibility when they receive information about changes in a beneficiary's circumstances that may affect eligibility.  California made the payments because it did not share all available Medicaid eligibility information with Arizona.  As a result, for the period July 1, 2005, through June 30, 2006, the OIG estimated that California paid $154,470 ($77,235 Federal share) for Medicaid services provided to beneficiaries who should not have been eligible to receive benefits.

The OIG recommended that California work with Arizona 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 $154,470 ($77,235 Federal share), made on behalf of beneficiaries residing in Arizona.  California generally agreed with the OIG’s recommendations. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50700058.pdf

Follow-Up Audit of the Medicaid Drug Rebate Program in Iowa (A-07-07-03094)

In a follow-up audit of Iowa’s Medicaid drug rebate program, the OIG found that, as of June 30, 2006, the State had generally corrected the control weaknesses identified in the OIG’s previous audit.  However, the State had not developed adequate policies and procedures to offer the State’s hearing mechanism for disputes that were 60 days old or to ensure that interest collections were properly and accurately reported.  As a result, the State had not reported interest totaling $873 that was collected during the OIG’s audit period.  Finally, the State had established controls over and accountability for collecting rebates on single-source drugs administered by physicians.  Under the drug rebate program, manufacturers receive Federal Medicaid funding for covered outpatient drugs by entering into a rebate agreement with CMS and paying quarterly rebates to the States.

The OIG recommended that the State (1) develop and follow policies and procedures to offer use of the State’s hearing mechanism to resolve disputes after 60 days; (2) develop and follow policies and procedures to properly report interest collections on the Form CMS-64 summary sheet; and (3) report interest of $873 that was collected, but not reported, during the audit period.  The State concurred, either wholly or in part, with all of the OIG’s findings and recommendations. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70703094.pdf

Follow-up Review of the Medicaid Drug Rebate Program in Kentucky (A-05-08-00015)

In a follow-up audit of Kentucky’s Medicaid drug rebate program, the OIG found that the State had implemented, as of June 30, 2006, the recommendations from the OIG’s prior audit.  Under the drug rebate program, manufacturers receive Federal Medicaid funding for covered outpatient drugs by entering into a rebate agreement with CMS and paying quarterly rebates to the States. 

The State had implemented the OIG’s recommendations related to verifying rebate amounts reported on the Form CMS-64.9R, reconciling accounts receivable amounts to subsidiary records, and collecting older outstanding drug rebates. Additionally, the State had established controls over collecting rebates on single-source drugs administered by physicians.  Therefore, this report offered no recommendations.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50800015.pdf

Follow-up Review of the Medicaid Drug Rebate Program in Wisconsin (A-05-08-00012)

The State agency implemented the recommendations from the OIG’s prior audit that related to reconciling the outstanding rebate balance reported on the CMS-64.9R and implementing controls to account for interest related to rebate payments.  Additionally, the State agency established controls over collecting rebates on single-source drugs administered by physicians.  Therefore, the OIG does not offer any recommendations. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50800012.pdf

Follow-Up Audit of the Medicaid Drug Rebate Program in Washington State (A-09-07-00062) 

In a follow-up audit of Washington State’s Medicaid drug rebate program, the OIG found that, as of June 30, 2006, the State had implemented the recommendations from the OIG’s prior audit that related to establishing (1) formal policies and procedures for its drug rebate program and (2) internal controls for segregation of duties and updating of subsidiary ledger accounts.  In addition, the State had established controls over and accountability for collecting rebates on single-source drugs administered by physicians.  However, the State had not fully implemented the recommendations related to management oversight over account adjustments and writeoffs, interest verification, and dispute resolution.  Under the drug rebate program, manufacturers receive Federal Medicaid funding for covered outpatient drugs by entering into a rebate agreement with CMS and paying quarterly rebates to the States.

The OIG reiterated its recommendations that the State implement internal controls for management oversight over account adjustments and writeoffs, accrue interest to verify the accuracy of interest payments received, and actively work to resolve manufacturer disputes.  The State said that it was working to implement the recommendations. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region9/90700062.pdf

Follow-up Review of the Medicaid Drug Rebate Program in Florida
(A-04-07-07022)

The OIG conducted a follow-up audit of Florida's Medicaid drug rebate program to determine whether the State agency had (1) implemented the recommendations made in the OIG’s previous audit of the Florida drug rebate program and (2) established controls over the drug rebate program, including the collection of rebates on single-source drugs administered by physicians.  Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with CMS and paying quarterly rebates to the States.  The OIG found that the State had implemented the recommendations from the its prior audit.  Therefore, this report contains no recommendations. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region4/40707022.pdf

Follow-Up Audit of the Medicaid Drug Rebate Program in Nebraska
(A-07-07-03097)

In a follow-up audit of Nebraska's Medicaid drug rebate program, the OIG found that the State had not corrected all of the weaknesses identified in the OIG’s previous audit.  Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with CMS and paying quarterly rebates to the States.  The State had corrected the previously reported weakness in its dispute resolution hearing mechanism.  However, the State had not (1) developed a subsidiary accounts receivable system that detailed all drug rebate transactions, including adjustments; (2) reconciled the general ledger to the subsidiary accounts and to the Form CMS-64.9R; (3) reconciled the quarterly cash receipts log to the Form CMS-64.9R; (4) estimated and accrued interest on all overdue rebate balances; or (5) reported interest received on the Form CMS-64 Summary Sheet instead of as a rebate receivable.  Additionally, the State agency did not establish controls over and accountability for collecting rebates on single-source drugs administered by physicians.

The OIG recommended that the State agency develop and follow policies and procedures that include (1) ensuring that all adjustments are traceable to the subsidiary accounts receivable system, (2) reconciling the general ledger account to the subsidiary accounts and to the Form CMS-64.9R using actual adjustments supported in the system, (3) documenting procedures for reconciling the quarterly cash receipts log to the Form CMS-64.9R, (4) estimating and accruing interest on all overdue rebate balances, and (5) reporting interest received on the Form CMS-64 Summary Sheet instead of as a rebate receivable.  The OIG also recommended that the State begin collecting drug rebates on single-source drugs administered by physicians.  The State agreed with all of the OIG’s findings and recommendations except for the finding and recommendation regarding the reconciliation of the general ledger to subsidiary accounts and to Form CMS-64.9R. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70703097.pdf

Review of the Medicaid Drug Rebate Program In Minnesota (A-05-08-00010)

In a follow-up audit of Minnesota's Medicaid drug rebate program, the OIG found that, as of June 30, 2006, the State had established controls for collecting rebates on single-source drugs administered by physicians. Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with CMS and paying quarterly rebates to the States.

Because the State had adequate controls over its drug rebate program, the OIG made no recommendations.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region5/50800010.pdf

Follow-Up Audit of the Medicaid Drug Rebate Program in North Dakota
(A-07-08-03105)

In a follow-up audit of North Dakota's Medicaid drug rebate program, the OIG found that the State had partially implemented procedures to correct the weakness relating to billing and tracking $0 unit rebate amounts (URA) that the OIG identified in the OIG’s previous audit.  Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with CMS and paying quarterly rebates to the States.

The OIG also found that the State did not have a mechanism to adequately monitor disputed drug rebates.  Further, the State did not have written policies and procedures governing the calculation of interest on unpaid balances from drug manufacturers and generally lacked written policies and procedures over the drug rebate program.  Finally, although the State had established controls over collecting rebates on single-source drugs administered by physicians, the procedures did not fully comply with the Deficit Reduction Act of 2005 (DRA).

The OIG recommended that the State develop procedures to track $0 URA line items and notify manufacturers when they fail to remit proper URA payment; track open and closed disputed drug rebates and make the State's hearing mechanism available to manufacturers; invoice manufacturers for interest when appropriate; and properly report all rebates invoiced, rebate collections, and accounts receivables to ensure that CMS receives accurate drug rebate information.  The OIG also recommended that the State ensure that it complies with the DRA's timeframes for invoicing physician-administered drugs.  Finally, the OIG recommended that the State invoice manufacturers for single-source physician-administered drugs as required by the DRA and the "State Medicaid Manual."

The State did not specifically address the OIG’s findings and recommendations but said that it would develop written procedures regarding the drug rebate program and procedures specific to physician-administered drugs. The State also said that it had invoiced manufacturers for single-source physician-administered drugs. 

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region7/70803105.pdf

Follow-Up Audit of the Medicaid Drug Rebate Program in Hawaii
(A-09-07-00081)

In a follow-up audit of Hawaii's Medicaid drug rebate program, the OIG found that the State had partly implemented the recommendation from the OIG’s prior audit that related to collection of rebate interest but had not implemented, as of June 30, 2006, the recommendations related to accuracy of reporting to the Centers for Medicare and Medicaid Services (CMS) and amount of the outstanding accounts receivable balance. Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with CMS and paying quarterly rebates to the States.

The OIG recommended that the State agency (1) establish written policies and procedures to ensure that interest is properly collected on rebate receivable items that were outstanding before the transition to the current fiscal agent; (2) establish written policies and procedures for preparing Form CMS-64.9R to ensure the accuracy of amounts reported to CMS, including drug rebates for the supplemental program; (3) determine the amount of the outstanding rebate accounts receivable balance before the transition to the current fiscal agent and properly report the balance on Form CMS-64.9R; and (4) establish a crosswalk for collecting rebates for single-source drugs administered by physicians for claim forms that do not include National Drug Codes.  The State agency did not dispute the findings and provided information on the status of corrective actions taken.

To view the full report, click here: http://www.oig.hhs.gov/oas/reports/region9/90700081.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 

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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