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

2. Audit of North Carolina's Buy-In of Medicare Part B Premiums for Medicaid Beneficiaries From April 2004 Through March 2007 (A-04-07-03011)

3. Review of Excessive Payments for Outpatient and Inpatient Services Processed by Blue Cross and Blue Shield of Georgia (A-04-07-07021)

4. Review of Medicaid Outpatient Drug Expenditures in West Virginia for the Period October 1, 2003, Through September 30, 2005 (A-03-07-00220)

5. Review of Methodist Hospital Wage Data for the Fiscal Year 2009, Wage Indexes (A-06-07-00098)

6. Review of High-Dollar Payments for Part B Services Processed by First Coast Service Options, Inc. for the Period January 1, 2004, Through December 31, 2006 (A-04-07-06021)

7. Review of Quality Improvement Organization in Tennessee for August 1, 2002, through July 31, 2005 (A-04-06-00023)

8. A Comparison of Average Sales Prices to Widely Available Market Prices for Inhalation Drugs (OEI-03-07-00190)

1. Review of Centers for Medicare & Medicaid Services' Medicaid Information Technology Audit Resolution Process (A-04-06-05039)

Of 197 Medicaid-related information technology (IT) recommendations that the Office of Inspector General made to State Medicaid agencies in 16 final reports between October 1, 2002, and September 30, 2005, the Centers for Medicare & Medicaid Services (CMS) resolved 17 within the 6-month periods following issuance, as required by regulations.  CMS resolved an additional 124 recommendations after the 6-month periods had expired.  The remaining 56 recommendations had not been resolved as of June 30, 2007.  CMS did not design its procedures for resolving IT audit recommendations to ensure that the recommendations were resolved within 6 months.

The OIG recommended that CMS establish procedures to ensure that all IT audit recommendations are resolved within 6 months of receiving an audit report.  CMS concurred with the OIG’s recommendation and described steps it has taken to improve the audit resolution process. 

To view the full report, click here: http://oig.hhs.gov/oas/reports/region4/40605039.pdf

2. Audit of North Carolina's Buy-In of Medicare Part B Premiums for Medicaid Beneficiaries From April 2004 Through March 2007 (A-04-07-03011)

For the quarters ended June 2004 through March 2007, the North Carolina Department of Health and Human Services, Division of Medical Assistance, did not claim Federal share for Medicare Part B premiums that it paid on behalf of some Medicaid beneficiaries (buy-in) in accordance with Federal requirements.  The Social Security Act allows States to use Medicaid funds to pay Medicare Part B premiums on behalf of certain persons eligible for both Medicare and Medicaid.  Of the $722 million that the State claimed, $698 million was eligible for Federal share, and approximately $24 million (approximately $16 million Federal share) was for beneficiaries in buy-in eligibility categories that were ineligible for Federal share.

The OIG recommended that the State (1) refund to the Federal Government the $16 million incorrectly claimed for Federal share for Part B premiums, (2) perform a review of claims after the end of the OIG’s audit period and refund any unallowable Federal share, and (3) develop adequate internal controls to ensure that Part B premiums claimed for Federal share are only for beneficiaries in eligible categories.  The State concurred with the OIG’s findings and recommendations. 

To view the full report, click here: http://oig.hhs.gov/oas/reports/region4/40703011.pdf

3. Review of Excessive Payments for Outpatient and Inpatient Services Processed by Blue Cross and Blue Shield of Georgia (A-04-07-07021)

Of the 94 high-dollar payments that Blue Cross and Blue Shield of Georgia, Inc. (BCBSG) made to Medicare Part A providers in calendar years 2004 and 2005, 12 totaling $264,000 were inappropriate.  Eight overpayments totaling $209,000 had been refunded before the start of the OIG’s fieldwork and four overpayments totaling $54,000 remained outstanding.  BCBSG is a fiscal intermediary serving Medicare providers in Georgia.  It had edits in place for high-dollar charges during the OIG’s audit period, which contributed to the high number of appropriate payments it processed.  However, BCBSG made some inappropriate payments because neither its system nor the common working file had sufficient edits in place during calendar years 2004 or 2005 to detect billing errors related to the Healthcare Common Procedure Coding System codes and units of service.

The OIG recommended that BCBSG recover the $54,000 in identified overpayments.  BCBSG agreed with the OIG’s findings.  BCBSG stated it had recovered $13,000 of the identified overpayments and was in the process of recovering the remaining $42,000. 

To view the full report, click here: http://oig.hhs.gov/oas/reports/region4/40707021.pdf

4. Review of Medicaid Outpatient Drug Expenditures in West Virginia for the Period October 1, 2003, Through September 30, 2005 (A-03-07-00220)

For fiscal years 2004 and 2005, West Virginia claimed $286,000 in Medicaid reimbursement for a duplicate prior period adjustment and for prescription drugs that were ineligible for reimbursement.  The Medicaid drug rebate program generally pays for covered outpatient drugs if their manufacturers have rebate agreements with Centers for Medicare & Medicaid Services (CMS) and pay rebates to the States.  Under the drug rebate program, CMS provides the States with a quarterly Medicaid drug tape, which the States use to verify coverage of the drugs for which they claim reimbursement.

An additional $2.1 million represented expenditures for drug products that were not listed on the quarterly drug tapes.  Because the Department of Health and Human Resources (the State agency) did not verify whether these drugs were eligible for coverage, these expenditures may not have been allowable.  The OIG identified no other errors for the remainder of the $808 million ($615 million Federal share) that the State claimed.

The OIG recommended that the State (1) refund $286,000 to the Federal Government for a duplicate prior period adjustment and for drug expenditures that were not eligible for Medicaid coverage, (2) work with CMS to resolve $2.1 million 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 agreed with the OIG’s recommendations. 

To view the full report, click here: http://oig.hhs.gov/oas/reports/region3/30700220.pdf

5. Review of Methodist Hospital Wage Data for the Fiscal Year 2009, Wage Indexes (A-06-07-00098)

Methodist Hospital (the Hospital) overstated contract labor costs by $617,000 and understated contract labor hours by 11,143 on its fiscal year (FY) 2006 Medicare cost report.  Under the inpatient prospective payment system for acute-care hospitals, Medicare Part A pays hospital costs at predetermined, diagnosis-related rates for patient discharges.  The Centers for Medicare & Medicaid Services (CMS) adjusts prospective payments by the wage index applicable to the area in which each hospital is located.  While gathering the requested data for the audit, the Hospital identified the errors and reported them to the fiscal intermediary.  Because the fiscal intermediary corrected the Hospital's Medicare cost report, this report has no recommendations.

6. Review of High-Dollar Payments for Part B Services Processed by First Coast Service Options, Inc. for the Period January 1, 2004, Through December 31, 2006 (A-04-07-06021)

Of the 300 high-dollar payments in the OIG’s random samples of claims that First Coast Service Options, Inc. (First Coast) paid to providers, 299 were appropriate.  First Coast overpaid a provider during calendar years (CY) 2004-2006, $12,356 for the remaining claim.  First Coast made the overpayment in calendar year 2005 because the provider incorrectly claimed excessive units of service.  In addition, the Medicare claim processing systems did not have sufficient edits in place during CYs 2003-2005 to detect and prevent payments for these types of erroneous claims.  The OIG recommended that First Coast recover the $12,000 overpayment.  First Coast agreed to recover the $12,000 overpayment.

To view the full report, click here: http://oig.hhs.gov/oas/reports/region4/40706021.pdf

7. Review of Quality Improvement Organization in Tennessee for August 1, 2002, through July 31, 2005 (A-04-06-00023)

Of the $13.81 million of costs reviewed from August 1, 2002, through July 31, 2005, $13.66 million appeared reasonable for Federal reimbursement.  Of the remaining costs, QSource, the Tennessee Quality Improvement Organization (QIO), incurred $31,000 of costs that were unallowable and $124,000 of costs that were potentially unallowable.  The Centers for Medicare & Medicaid Services (CMS) contracts with QIOs in each State to improve the quality of care.  The OIG conducted this review at the request of the Senate Finance Committee.

The OIG recommended that QSource (1) refund $6,700 for unallowable physician consultant fees, (2) reduce the indirect cost pool by $24,000 for the balance of unallowable costs incurred, and (3) work with the CMS contracting officer to determine what portion of the $124,000 incurred for conference-related costs during the OIG audit period should be excluded from the indirect cost pool for purposes of determining final rates.

In its written comments on the OIG’s draft report, QSource agreed in part and disagreed in part with the OIG’s findings and recommendations and submitted additional documentation regarding conference costs.  The comments and additional documentation did not change the OIG’s findings or recommendations. 

To view the full report, click here: http://oig.hhs.gov/oas/reports/region4/40600023.pdf

8. A Comparison of Average Sales Prices to Widely Available Market Prices for Inhalation Drugs (OEI-03-07-00190)

Sections 1847A(d)(1) and (2) of the Social Security Act (the Act) direct OIG to undertake pricing studies that compare average sales prices (ASP) to widely available market prices and average manufacturer prices (AMP).  The OIG found that the volume-weighted ASP for two of the five inhalation drugs under review (albuterol and levalbuterol) exceeded the widely available market price by at least 5 percent in the second quarter of 2007.  In addition, the OIG found that the Medicare payment amount for albuterol in the third quarter of 2007 was 13 times greater than the widely available market price in the previous quarter because of CMS's decision to reestablish a single drug code for albuterol and levalbuterol effective July 1, 2007.  After the OIG completed its analysis, but before the OIG issued a draft report, CMS separated albuterol and levalbuterol back into two codes, thereby establishing separate payment amounts for the two drugs. 

To view the full report, click here: http://oig.hhs.gov/oei/reports/oei-03-07-00190.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