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 Medicare and Medicaid Credit Balances at Merrimack Valley Hospital for the Period Ending December 31, 2007 (A-01-08-00531)
2. Review of Medicare Billing for Oxaliplatin at Memorial Hospital of Rhode Island During Calendar Years 2004 and 2005 (A-01-08-00525)
3. Centers for Medicare & Medicaid Services Audits of Medicare Part D Bids (OEI-05-07-00560) 
4. Review of Colorado Medicaid Mental Health Capitation and Managed Care Program (A-07-06-04067)
5. Review of Allowable Medicare Capital Disproportionate Share Payments for the Period October 1, 2000, Through September 30, 2006 (A-07-08-02735)
6. Review of Medicaid Hospital Transfer Payments in Michigan for October 1, 2003, through September 30, 2006 (A-05-08-00045)
7. Partnership Review of Medicaid Claims Processed by Cerebral Palsy and Stavros for Personal Care Attendant Services Provided to Beneficiaries During Inpatient Stays (A-01-08-00001)
8. New OIG review letters have been posted for New Jersey and Wisconsin.

1. Review of Medicare and Medicaid Credit Balances at Merrimack Valley Hospital for the Period Ending December 31, 2007 (A-01-08-00531)

As of December 31, 2007, Merrimack Valley Hospital’s (the Hospital) accounting records for Medicaid beneficiaries contained 35 credit balances more than 60 days old totaling $11,000 ($5,700 Federal share) that had not been promptly returned to the Medicaid program, in accordance with State Medicaid requirements.  The Hospital’s accounting records for Medicare beneficiaries contained no outstanding credit balances more than 60 days old.

> Click here to view the full report

2. Review of Medicare Billing for Oxaliplatin at Memorial Hospital of Rhode Island During Calendar Years 2004 and 2005 (A-01-08-00525)

During calendar years 2004 and 2005, Pinnacle Business Solutions, Inc., overpaid Memorial Hospital of Rhode Island $202,000 for Medicare outpatient oxaliplatin claims.

> Click here to view the full report

3. Centers for Medicare & Medicaid Services Audits of Medicare Part D Bids (OEI-05-07-00560)

The OIG found that one-quarter of all bid audits completed for plan years 2006 and 2007 identified at least one material finding.  The largest number of bid audits with material findings identified non-pharmacy costs and methodology errors.   

Bid amounts are the basis for payments to Part D plan sponsors.  CMS currently uses
bid audits as part of its oversight of Medicare Part D bidding.  In addition, according to
CMS staff, CMS intends to supplement its oversight with information gathered from
financial audits.   

The OIG found that CMS has not adjusted plan sponsors’ bid amounts based on bid audit material findings.  Instead, CMS uses bid audits to influence the submission, review, and audit of future bid amounts.  The OIG also found that as of April 2008, only 4 percent of the required financial audits of plan year 2006 had begun.  Without financial audits, CMS will not be able to ensure the accuracy of the base period data used as the foundation of the bid amount.

To improve CMS’s oversight of Part D bid amounts, the OIG recommend that CMS modify the bid audit process to hold plan sponsors more accountable for material findings identified in bid audits.  The OIG also recommend that CMS conduct the required number of financial audits in a timely manner.

CMS stated that it will carefully consider the OIG’s recommendation to modify the bid audit process to hold Part D sponsors more accountable for material findings.  In addition, CMS agreed that it should conduct the required financial audits in a timely manner.  OIG continues to recommend that CMS strengthen its oversight and enforcement approach to hold Part D sponsors accountable for their bid submissions.

> Click here to view the full report

4. Review of Colorado Medicaid Mental Health Capitation and Managed Care Program (A-07-06-04067)

The supplemental payments that the State made for mental health services provided to foster care children in child placement agencies were not fully consistent with Federal and State requirements.  Of the $23 million ($11.7 million Federal share) in supplemental payments made during the OIG’s audit period, $3.3 million (Federal share) was unallowable because, contrary to Federal requirements, the State did not obtain the Centers for Medicare & Medicaid Services’ (CMS) approval of contracts covering the supplemental payments from August 13, 2003, through the end of the OIG’s audit period (September 30, 2004). 

In addition, the State did not provide documentation that the remaining $8.4 million (Federal share) in supplemental payments was removed from the capitation payments that the State made to mental health assessment and service agencies.  Thus, the OIG is setting aside the $8.4 million for CMS adjudication.

The OIG recommended that the State (1) refund $3.3 million to the Federal Government for the Federal share of the unauthorized supplemental payments and (2) work with CMS to resolve the $8.4 million (Federal share) in supplemental payments for which the State did not provide documentation that the supplemental payments were not already included in the capitation payments.

In written comments on the OIG’s draft report, the State disagreed with their findings and recommendations.  After reviewing the State’s comments, the OIG modified their report and removed the finding of unallowable costs related to the failure to comply with State contract provisions.  The OIG also modified their report to set aside, rather than question, the $8.4 million in potentially unallowable supplemental payments. 

> Click here to view the full report

5. Review of Allowable Medicare Capital Disproportionate Share Payments for the Period October 1, 2000, Through September 30, 2006 (A-07-08-02735)

OIG found that a number of rural hospitals and hospitals with fewer than 100 beds claimed Medicare capital disproportionate share hospital (DSH) payments even though those facilities were, according to Federal requirements, ineligible for these payments.  Of 2,396 acute-care hospitals that claimed $1.62 billion in capital DSH payments on submitted cost reports for the period October 1, 2000, through September 30, 2006, 397 hospitals in rural areas or with fewer than 100 beds claimed $21.9 million in unallowable capital DSH payments.  The remaining $1.59 billion was claimed by hospitals that were classified as urban and had 100 or more beds.

The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) (1) direct the fiscal intermediaries to recover $21.9 million in capital DSH payments made to ineligible hospitals, in accordance with CMS policies and procedures; (2) determine whether capital DSH payments were made to ineligible hospitals for the period subsequent to the end of their review (fiscal year 2006) and direct fiscal intermediaries to recover any unallowable payments; and (3) conduct reviews on a recurring basis to determine whether capital DSH payments are being made to ineligible hospitals.

In written comments on their draft report, CMS agreed with the OIG’s recommendations and described corrective actions that it was undertaking.

> Click here to view the full report

6. Review of Medicaid Inpatient Hospital Transfer Payments in Michigan for October 1, 2003, through September 30, 2006 (A-05-08-00045)

The State agency did not properly pay inpatient hospital claims and claim Federal reimbursement for beneficiaries transferring from one hospital to another on the same day in accordance with the Centers for Medicare and Medicaid Services-approved State plan.  Specifically, the State agency made overpayments totaling $215,000 ($121,000 Federal share) to 28 hospitals for 36 of 57 inpatient hospital claims reviewed.

> Click here to view the full report

7. Partnership Review of Medicaid Claims Processed by Cerebral Palsy and Stavros for Personal Care Attendant Services Provided to Beneficiaries During Inpatient Stays (A-01-08-00001)

The Massachusetts Executive Office of Health and Human Services internal controls and procedures were inadequate to prevent or detect $610,000 ($305,000 Federal share) in overpayments for personal care attendant services provided to beneficiaries who were residents of either nursing facilities or other inpatient facilities.

> Click here to view the full report

8. New OIG review letters have been posted for New Jersey and Wisconsin. 

To get to these and previously issued letters, click here.

As enacted by section 6031 of the Deficit Reduction Act of 2005, section 1909 of the Social Security Act (Act) provides a financial incentive for States to enact false claims acts that establish liability to the State for the submission of false or fraudulent claims to the State's Medicaid program.  If a State false claims act is determined to meet certain enumerated requirements, the State is entitled to an increase of 10 percentage points in its share of any amounts recovered under a State action brought under such a law. 

On August 21, 2006, OIG published a notice in the Federal Register (71 FR 48552 PDF) that sets forth OIG's guidelines for reviewing State false claims acts.  The guidelines invited States to request OIG's review of State laws to determine if the laws meet the requirements of section 1909(b) of the Act. 

For more background information, and links to specific State reviews, click here.

For the List of Excluded Individuals/Entities (LEIE), follow this link:
http://oig.hhs.gov/fraud/exclusions.asp

For the index of recent they Advisory Opinions, follow this link: http://oig.hhs.gov/fraud/advisoryopinions/opinions.asp

To see "Frequently Asked Questions" (FAQs) on the OIG Advisory Opinion process, go here: http://oig.hhs.gov/fraud/exclusions/faq.asp