1. Review of Retiree Drug Subsidy Costs Reported by the City of Fall River for Plan Years 2006 and 2007

For plan years 2006 and 2007, the City of Fall River, Massachusetts, correctly reported drug costs to the Retiree Drug Subsidy program that were incurred under its qualified retiree prescription drug plan within the effective and termination dates of each qualifying covered retiree’s (1) plan coverage and (2) subsidy period approved by the Centers for Medicare & Medicaid Services.  Accordingly, this report contains no recommendations.

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2. Medicaid and Medicare Home Health Payments for Skilled Nursing and Home Health Aide Services

Payment policies for home health services create vulnerabilities that may lead to Medicaid and Medicare paying for the skilled nursing and home health aide services.  The claims information available to Medicaid payors does not allow them to ensure the appropriateness of payments. 

Medicare pays home health providers through the prospective payment system (PPS) for services provided during episodes of care.  For Medicaid services, OIG limited their review to fee-for-service claims. Medicaid is the payor of last resort; therefore, Medicaid should pay for home health services only if Medicare or another payor does not pay for them.  During the period reviewed, OIG identified Medicaid payments amounting to $3.3 million for 68,765 skilled nursing and home health aide claims potentially coverable by Medicare.  The OIG reviewed a sample of beneficiaries' case records to determine whether the Medicaid payments were appropriate based on Medicaid and Medicare policies.  A companion report entitled "Duplicate Medicaid and Medicare Home Health Payments: Medical Supplies and Therapeutic Services "(OEI-07-06-00640) describes the extent to which both Medicaid and Medicare paid home health providers for the same medical supplies and therapeutic services. 

The OIG found that payment policies create vulnerabilities that may lead to Medicaid and Medicare paying for the same services.  Medicaid paid nearly $2 million for skilled nursing and home health aide services that were also vulnerable to being paid by Medicare in four of five States. Problems with coordination of care between providers and a lack of clarity in the Medicare coverage policy regarding billing for unskilled and skilled nursing services contributed to vulnerabilities.  Claims data do not contain sufficient information to determine the appropriateness of Medicare coverage, limiting States' abilities to prevent Medicaid payments for services covered by Medicare. 

CMS could consider methods to better integrate Medicaid and Medicare claims processing to prevent duplicate payments without relying on medical review and provide greater clarity in the CMS "Medicare Benefit Policy Manual" to explain that unskilled services provided during a skilled nursing visit paid under the PPS are included in the PPS payment.

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3. Medicare Payments in 2007 for Medical Equipment and Supply Claims with Invalid or Inactive Referring Physician Identifiers

Medicare allowed almost $34 million in 2007 for medical equipment and supply claims with physician identification numbers that had never been issued or had been deactivated by the Centers for Medicare & Medicaid Services (CMS).  The $34 million included $5 million for claims with dates of service after the physicians identified on the claims had died. Medicare payments for medical equipment and supplies are authorized only when the items are ordered by physicians and meet coverage requirements. Claims from providers of medical equipment and supplies with invalid or inactive physician identification numbers should not be paid.  From May 2005 to May 2008, Medicare accepted claims that included unique physician identification numbers (UPIN), national provider identifiers (NPI), or a combination of both.  (Since May 2008, Medicare has only accepted claims that include NPIs.)  Both physicians and suppliers must apply for and obtain NPIs from CMS.  As of May 2008, suppliers are required to include their own NPIs in the primary provider field on claims, and the referring physician's NPI in the secondary provider field.  However, CMS instituted a temporary provision that allows suppliers who cannot obtain referring physicians' NPIs to instead use their own NPIs in the secondary provider field.

The OIG found that Medicare allowed over $6 million in 2007 for claims with invalid referring physician UPINs that had never been issued by CMS. During the same year, Medicare also allowed almost $28 million for claims with referring physician UPINs that CMS had deactivated, including $5 million for claims with a date of service after the physician identified on the claims had died.  Medicare also allowed over $300,000 for claims with invalid referring physician NPIs in 2007.

The OIG recommend that CMS determine why Medicare claims with identifiers associated with deceased referring physicians continue to be paid, implement claims-processing system changes to ensure that NPIs for both referring physicians and suppliers listed on medical equipment and supply claims are valid and active, emphasize to suppliers the importance of using accurate NPIs for both referring physicians and suppliers when submitting Medicare claims, and determine the earliest date to end the provision that allows suppliers to submit claims without referring physician NPIs while maintaining beneficiary access to services.  CMS concurred with OIG’s recommendations and stated that it has taken steps, incorporating the recommendations from their report, toward correcting the problems they identified. 

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4. Review of Emergency Health Services at Orlando Regional Healthcare Furnished to Undocumented Aliens Covered by Section 1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003

In OIG’s review of emergency health services that Orlando Regional Healthcare System, Inc. (ORH), furnished to undocumented aliens covered by section 1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, OIG found that the ORH received approximately $17,000 in unallowable payments for these services.  The unallowable payments occurred because ORH did not always follow its own policies and procedures for ensuring that services were appropriate, medical records were sufficiently documented, and treatments were for emergency medical conditions.  Furthermore, ORH’s written policies and procedures did not address section 1011 requirements regarding reimbursements from third-party payers.

The OIG recommended that ORH (1) refund approximately $17,000 received for services that did not meet section 1011 reimbursement requirements, (2) review the remaining claims for their audit period and claims for subsequent periods and submit adjustments for any claims that did not meet section 1011 reimbursement requirements, (3) follow its existing policies and procedures to ensure that future section 1011 program claims meet section 1011 reimbursement requirements, and (4) develop and implement procedures to ensure that reimbursements for services are made to the extent that a third-party payer did not otherwise reimburse care.  ORH agreed with their recommendations.

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5. Review of High-Dollar Payments for Medicare Outpatient Claims Processed by TriSpan Health Services for the Period January 1 through December 31, 2006

Of the three payments of $50,000 or more that TriSpan made to one provider for outpatient services during calendar year 2006, two were appropriate.  Regarding the remaining payment, TriSpan underpaid the provider $13,856.

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6. Review of High-Dollar Payments for Medicare Part B Claims Processed by NHIC, Corporation, for Calendar Years 2004–2006

During calendar years 2004–2006, NHIC, Corp., overpaid providers $80,671 for high-dollar (greater than $10,000) Medicare Part B claims.

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7. Review of Medicaid Credit Balances at Mercy Hospital as of April 1, 2008

As of April 1, 2008, Mercy’s Medicaid credit balances included 10 overpayments totaling $18,720 ($9,360 Federal share) that had not been returned to the Medicaid program.

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8. Review of State Plan Amendments Authorizing Disproportionate Share Hospital Payments by Pennsylvania to Hospitals of State-Related Universities

 For State fiscal years (FY) 2005–06 and 2006–07, two hospitals in Pennsylvania did not retain their Medicaid disproportionate share hospital (DSH) payments, and the universities that received the money may not have used it to help offset the medical assistance share of their medical education costs in compliance with the State plan amendments approved by the Centers for Medicare & Medicaid Services (CMS).  The two hospitals redirected a total of $35.1 million (Federal share) to their university medical schools but did not require the medical schools to account for how they used the funds.  Accordingly, OIG could not determine whether DSH funds were used in compliance with the State plan amendments.  Hospital officials told OIG that the State had instructed the hospitals to redirect the funds to the universities associated with the hospitals.

The OIG recommended that the State work with CMS to resolve (1) $35.1 million (Federal share) in DSH payments redirected to university medical schools in State FYs 2005–06 and 2006–07 and (2) DSH payments redirected to university medical schools after their review period, including any portion of the $25.5 million estimated Federal share for State FY 2007–08.

In comments on their draft report, State officials agreed to work with CMS on any future State plan amendments pertaining to academic medical centers but said that they were not aware of any Federal regulation or legislation that requires the hospitals to retain their DSH payments.  The OIG revised their second recommendation to acknowledge CMS’s approval of the State plan amendment for State FY 2007–08 subsequent to their review.  The OIG support their recommendations, as revised.

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9. Review of Medicaid Inpatient Hospital Transfer Payments in Indiana for October 1, 2003, Through September 31, 2006

The Indiana Family and Social Services Administration made overpayments totaling $622,000 ($389,000 Federal share) to 20 hospitals for 83 inpatient claims for the period October 1, 2003, through September 30, 2006.

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10. Comparing Pharmacy Reimbursement:  Medicare Part D to Medicaid

Nationally, Part D and Medicaid pharmacy reimbursement amounts for most of the single-source drugs that OIG reviewed were similar; however, Medicaid reimbursement amounts for the multiple-source drugs that OIG reviewed were typically higher than the Part D amounts.  Medicare Part D coverage is provided through private drug plans offered by plan sponsors.  Under Federal guidelines, Part D sponsors independently negotiate pharmacy reimbursement and price concessions with manufacturers and pharmacies.  Unlike Part D, State Medicaid agencies administer Medicaid and reimburse pharmacies for drugs.  States, in conjunction with the Federal Government, determine pharmacy reimbursement under broad Federal guidelines.  States also receive federally mandated Medicaid drug rebates and may negotiate with manufacturers for additional rebates.  This study compares only the amount reimbursed to pharmacies by Part D and Medicaid; it does not compare total program expenditures and does not examine the impact of rebates or post-point-of-sale price concessions. 

The OIG found that within the five States selected for their review, the Medicaid and Part D ingredient cost reimbursement amounts were similar for single-source drugs.  In all five States, the average Medicaid ingredient costs exceeded the average Part D ingredient costs for most multiple-source drugs under review.  In addition, Medicaid dispensing fees were substantially higher than average Part D dispensing fees for both the single-source and multiple-source drugs under review. 

Congress took action to reduce multiple-source drug prices in the Medicaid program through provisions in the Deficit Reduction Act of 2005.  These provisions would have expanded the number of drugs subject to Federal upper limits and reduced the Federal upper limit amounts for these multiple-source drugs.  These provisions would have also granted States access to average manufacturer price (AMP) data, which, in turn, would have allowed States to base Medicaid drug reimbursement on AMPs.  However, a Federal judge issued a preliminary injunction to prevent the implementation of AMP-based Federal upper limits and AMP-based Medicaid reimbursement amounts.  In addition, because of the Medicare Improvements for Patients and Providers Act of 2008, CMS is prohibited from establishing Federal upper limit amounts based on AMPs or sharing AMP data with States prior to October 1, 2009.  As a result, Federal upper limits and Medicaid reimbursement amounts are still based on published prices, which previous OIG work has found to result in inflated payments for multiple-source drugs.

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11. Review of High-Dollar Payments for Missouri Medicare Part B Claims Processed by Pinnacle Business Solutions, Inc., for the Period January 1 through December 31, 2005

During calendar year 2005, Pinnacle Business Solutions, Inc., overpaid four providers $237,000 for 35 Medicare Part B payments of $10,000 or more. 

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12. Review of High-Dollar Payments for Pennsylvania Medicare Part B Claims Processed by Highmark Medicare Services for the Period January 1, 2003, Through December 31, 2005

Of the 311 sampled payments of $10,000 or more that Highmark Medicare Services (Highmark) made as the carrier for Pennsylvania, 262 were appropriate, and Highmark was reviewing 1 additional payment at the time of OIG’s audit.  As a result, Highmark overpaid 16 providers $482,000 for 48 payments.