Feeley & Driscoll's OIG Updates: May 5, 2009

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.

This update is a monthly publication from the Healthcare Group at Feeley & Driscoll, P.C.

This OIG Update is also accessible from the F&D website, by visiting www.fdcpa.com/oig.updates.htm. For further information, please visit OIG’s website at http://www.oig.hhs.gov/index.asp.

1. Review of Pennsylvania's Determination of Medicaid Disproportionate Share Hospital Eligibility for the State-Operated Institutions for Mental Diseases
2. Review of High-Dollar Payments for Medicare Outpatient Claims Processed by TriSpan Health Services for the Period January 1 Through December 31, 2004
3. Review of High-Dollar Payments for New Mexico and Oklahoma Medicare Part B Claims Processed by Pinnacle Business Solutions, Inc., for the Period January 1 through December 31, 2006
4. Potential Improper Medicaid Payments for Outpatient Clinical Diagnostic Laboratory Services for Dual-Eligible Beneficiaries
5. Comparison of Third-Quarter 2008 Average Sales Prices and Average Manufacturer Prices:  Impact on Medicare Reimbursement for First Quarter 2009
6. Review of Inpatient Hospital Claims Billed as Family Planning Services Under the New York State Medicaid Program
7. Review of Timeliness of West Virginia's Retroactive Claims for Medicaid School-Based Services
8. Review of Oxaliplatin Billing at Hilo Medical Center for Calendar Year 2004 
9. Nursing Home Corporations Under Quality of Care Corporate Integrity Agreements
10. Nationwide Review of Evaluation and Management Services Included in Eye and Ocular Adnexa Global Surgery Fees for Calendar Year 2005
11. Review of Palmetto GBA’s Medicare Outpatient Payments for Oxaliplatin Drug Services in North Carolina
12. Review of Oxaliplatin Billing at San Joaquin General Hospital for Calendar Years 2004 and 2005
13. Review of Interrupted Stays at Inpatient Rehabilitation Facilities for Calendar Years 2004 and 2005

1. Review of Pennsylvania's Determination of Medicaid Disproportionate Share Hospital Eligibility for the State-Operated Institutions for Mental Diseases

The State agency included unallowable patient days for Medicaid beneficiaries between the ages of 22 and 64 and incarcerated individuals in its calculations of disproportionate share hospital (DSH) eligibility for its eight State-operated institutions for mental diseases (IMD).

The Office of Inspector General (OIG) removed the unallowable patient days from the DSH eligibility calculations.  Even with these exclusions, each of the eight IMDs qualified for a DSH payment.

>Click here to view the full report

2. Review of High-Dollar Payments for Medicare Outpatient Claims Processed by TriSpan Health Services for the Period January 1 through December 31, 2004

Of the 16 payments of $50,000 or more that TriSpan made to providers for outpatient services during calendar year 2004, 1 was appropriate. TriSpan overpaid two providers $767,000 on 15 claims.

>Click here to view the full report

3. Review of High-Dollar Payments for New Mexico and Oklahoma Medicare Part B Claims Processed by Pinnacle Business Solutions, Inc., for the Period January 1 through December 31, 2006

During calendar year 2006, Pinnacle Business Solutions, Inc., overpaid providers $86,000 for 12 Medicare Part B payments of $10,000 or more.  Some of the providers sent reimbursement payments, which reduced the outstanding overpayment amount to $46,000.  

>Click here to view the full report

4. Potential Improper Medicaid Payments for Outpatient Clinical Diagnostic Laboratory Services for Dual-Eligible Beneficiaries

The OIG determined that Medicaid programs in 8 of 11 selected States spent a total of $1.3 million in potential improper payments for clinical diagnostic laboratory services that were provided on an assignment-related basis to dual eligibles in FY 2005 and 2006.  Dual eligibles are beneficiaries who are enrolled in Medicare Part A and/or Part B and also entitled to some Medicaid benefits.  Over half of the potential improper payments OIG identified corresponded to five Current Procedural Terminology codes.  One of these codes accounted for almost 30 percent of the potential improper payments OIG identified. State Medicaid programs should not pay for any portion of outpatient clinical diagnostic laboratory services that were provided on an assignment-related basis to dual eligible’s who are enrolled in Medicare Part B.

This memorandum has no recommendations.  The OIG’s results demonstrate that opportunities exist to educate State Medicaid programs that they should not pay for any portion of outpatient clinical diagnostic laboratory services provided to dual-eligible beneficiaries.  CMS did not have any comments on this memorandum. 

>Click here to view the full report

5. Comparison of Third-Quarter 2008 Average Sales Prices and Average Manufacturer Prices:  Impact on Medicare Reimbursement for First Quarter 2009

Using a revised payment methodology recently implemented by CMS, OIG identified a total of 36 Healthcare Common Procedure Coding System (HCPCS) codes with average sales prices (ASP) that exceeded average manufacturer prices (AMP) by at least 5 percent in the third quarter of 2008.  If reimbursement amounts for these 36 codes had been based on 103 percent of the AMPs, Medicare expenditures would have been reduced by $9.4 million during the first quarter of 2009.  Pursuant to section 1847A(d)(3) of the Social Security Act (the Act), OIG must notify the Secretary of the Department of Health and Human Services (the Secretary) if the ASP for a particular drug exceeds the drug's AMP by a threshold of 5 percent.  If that threshold is met, section 1847A(d)(3) of the Act authorizes the Secretary to disregard the ASP for that drug and substitute the payment amount for the drug code with the lesser of the widely available market price for the drug (if any) or 103 percent of the AMP.  This is OIG's 11th report comparing ASPs to AMPs; however, CMS has yet to make any changes to reimbursement as a result of OIG's findings.  

Of the 36 HCPCS codes that met the threshold for price adjustment, 15 had AMP data for every drug product that CMS used to establish reimbursement amounts.  Twelve of the fifteen HCPCS codes were previously eligible for price adjustment under the revised payment methodology, with two codes meeting the 5-percent threshold in each of the past seven quarters, dating back to the first quarter of 2007.  The remaining 21 of 36 HCPCS codes also met the 5-percent threshold in the third quarter of 2008 but did not have AMP data for every drug product that CMS used when calculating reimbursement. 

The OIG could not compare ASPs and AMPs for 67 HCPCS codes because AMP data were not submitted for any of the drug products that CMS used to calculate reimbursement.  Manufacturers for almost 30 percent of these drug products had Medicaid drug rebate agreements and were therefore generally required to submit AMPs.  OIG will continue to work with CMS to evaluate and pursue appropriate actions against manufacturers that fail to submit required data.

>Click here to view the full report

6. Review of Inpatient Hospital Claims Billed as Family Planning Services Under the New York State Medicaid Program

New York State improperly claimed enhanced 90-percent Federal reimbursement for inpatient family planning claims submitted by hospitals.  Of the 173 claims in the OIG’s sample, 3 qualified as family planning services and could be claimed at the enhanced 90-percent Federal reimbursement rate.  However, the remaining 170 claims could not be claimed as family planning services or could be claimed only in part as family planning services.  Based on their sample results, OIG estimate that the State received $2.6 million in unallowable Federal Medicaid reimbursement.

This overpayment occurred because (1) providers incorrectly claimed services as family planning, (2) the State's Medicaid Management Information System (MMIS) edit routines did not adequately identify claims unrelated to family planning, (3) the State did not have procedures to allocate the costs of inpatient hospital claims partially related to family planning, and (4) providers did not properly complete sterilization consent forms.

The OIG recommended that the State (1) refund $2.6 million to the Federal Government, (2) reemphasize to providers that only services directly related to family planning should be billed as family planning, (3) ensure that MMIS edit routines properly identify claims that are ineligible for enhanced 90-percent Federal reimbursement, (4) develop procedures to properly allocate the cost of inpatient hospital stays partially related to family planning, (5) reinforce guidance to hospitals regarding Medicaid sterilizations, and (6) determine the amount of Federal Medicaid funds improperly reimbursed for claims unrelated to family planning subsequent to the OIG’s audit period and refund that amount to the Federal Government.  In its comments on their draft report, the State generally agreed with the OIG’s recommendations and described actions that it will take in response.

>Click here to view the full report

7. Review of Timeliness of West Virginia's Retroactive Claims for Medicaid School-Based Services

The State did not fully comply with Federal requirements for an exemption to the 2-year limit for filing retroactive claims for Medicaid school-based services.  A portion of the State's retroactive claim, $4.1 million (Federal share), fell outside the required 2-year filing period because it related to expenditures made by the State in quarters ending December 31, 2000, through June 30, 2001.  Of this amount, $2.3 million (Federal share) related to new cost components that were not in the original rates used to calculate the claims for school-based services and did not reflect the settlement of previously identified costs.  As a result, the $2.3 million (Federal share) was not exempt from the 2-year time limit and was therefore unallowable.  The remaining $1.8 million (Federal share) met the requirements for an exemption because it reflected the settlement of previously identified salary and fringe benefit costs.

The OIG recommended that the State refund $2.3 million (Federal share) for costs claimed after the 2-year filing limit that were not exempt and ensure that future claims comply with the 2-year filing limit.  In written comments on their draft report, the State did not concur with the OIG’s finding and recommendation.  However, nothing in the State's comments gave the OIG cause to modify their recommendation.

>Click here to view the full report

8. Review of Oxaliplatin Billing at Hilo Medical Center for Calendar Year 2004 

For calendar year 2004, Hilo Medical Center billed Medicare for an incorrect number of service units for the two oxaliplatin outpatient claims that the OIG reviewed and received overpayments totaling approximately $60,000.

>Click here to view the full report

9. Nursing Home Corporations Under Quality of Care Corporate Integrity Agreements

OIG found that all 15 corporations included in this review enhanced quality of care structures and processes while under their Corporate Integrity Agreements (CIA) and cited positive effects of the CIA.  All 15 corporations had written policies and procedures regarding quality of care, codes of conduct, and training required by their CIAs; monitored their quality of care using standardized data, internal self-assessment tools, and by tracking complaints; and created or expanded their compliance infrastructures to integrate quality of care.  This review included all nursing homes that were placed under CIAs between June 2000 and December 2005.

Under quality of care CIAs, nursing home corporations with identified quality of care problems consent to certain requirements in exchange for an agreement by the Department of Health and Human Services, Office of Inspector General (OIG) not to exclude them from participation in Federal health care programs.  A nursing home quality of care CIA is a contract that is typically entered into for 3 to 5 years and requires implementation of quality of care structures and processes and monitoring by an independent quality monitor.

Despite some initial resistance from 3 corporations, OIG found that all 15 corporations were ultimately responsive to quality monitors’ guidance and corporate representatives reported that they valued the input.  OIG’s review of quality monitoring reports and corporate annual reports confirmed the monitors’ opinions that the 15 corporations were largely responsive to their guidance.  Corporate representatives cited several benefits of quality monitoring, e.g., monitors offered new ideas and fresh ways of thinking about quality of care structures and processes.

Representatives of all 15 corporations described challenges they encountered when implementing the CIA requirements.  Corporations with multiple nursing homes encountered challenges to ensuring consistency in quality of care systems across all layers of their organizations and across geographic regions.  For example, an analysis of Quality Assessment and Assurance (QAA) committee minutes indicated that nursing homes’ implementation of quality of care systems was inconsistent.  Other challenges involved organizational disruptions, such as sales and purchases of nursing homes or corporate level reorganizations; staff resistance to implementation; use of staff time to implement the CIA requirements; and financial costs associated with CIAs.

Based on these findings, areas that OIG will explore for its oversight of future CIAs include: responding swiftly to noncompliant corporations and those that fail to address quality problems; including in the CIAs specific requirements for documentation of nursing home QAA activities; and sharing lessons learned by corporations and quality monitors with other corporations placed under subsequent CIAs.

>Click here to view the full report

10. Nationwide Review of Evaluation and Management Services Included in Eye and Ocular Adnexa Global Surgery Fees for Calendar Year 2005

Eye global surgery fees often did not reflect the number of evaluation and management (E&M) services that physicians provided to Medicare beneficiaries during global surgery periods.  Global surgery fees include payment for a surgical service and the related preoperative and postoperative E&M services provided during the global surgery period.  The period for major surgeries includes the day before the surgery, the day of the surgery, and the 90 days immediately following the day of the surgery.  In determining a global surgery fee, CMS estimates the number of E&M services that a physician provides to a typical beneficiary during the global surgery period.

Based on their sample results, OIG estimated that Medicare paid $97.6 million for E&M services that were included in eye global surgery fees but not provided during the global surgery periods in calendar year 2005.  The global surgery fees did not reflect the number of E&M services provided to beneficiaries because CMS had not adjusted or recently adjusted the relative value units for most of the sampled surgeries.

The OIG recommended that CMS consider (1) adjusting the estimated number of E&M services within eye global surgery fees to reflect the number of E&M services actually being provided to beneficiaries, which may reduce payments by an estimated $97.6 million, or (2) using the financial results of this audit, in conjunction with other information, during the annual update of the physician fee schedule.  In written comments on the OIG’s draft report, CMS acknowledged the merit of their findings but believed that it would be prudent to conduct further analysis before proposing any changes in the number of E&M services assigned to eye surgeries.

>Click here to view the full report

11. Review of Palmetto GBA’s Medicare Outpatient Payments for Oxaliplatin Drug Services in North Carolina

Palmetto GBA (a Medicare fiscal intermediary for North Carolina) made overpayments totaling $1.9 million for oxaliplatin drug services provided during calendar years 2004 and 2005.  However, the hospitals had identified and refunded $1.8 million. The OIG recommended Palmetto GBA recover the $160,000 in remaining overpayments and establish new procedures.  Palmetto GBA agreed with their recommendations. 

>Click here to view the full report

12. Review of Oxaliplatin Billing at San Joaquin General Hospital for Calendar Years 2004 and 2005

For calendar years 2004 and 2005, San Joaquin General Hospital billed Medicare for an incorrect number of service units for the two oxaliplatin outpatient claims that OIG reviewed and received overpayments totaling approximately $42,000.

>Click here to view the full report

13. Review of Interrupted Stays at Inpatient Rehabilitation Facilities for Calendar Years 2004 and 2005

Inpatient rehabilitation facilities (IRF) did not always bill correctly for interrupted stays with discharge dates during calendar years 2004 and 2005.  The OIG’s nationwide computer match showed that 448 IRFs billed incorrectly for 986 interrupted stays during that period.  If a Medicare inpatient is discharged from an IRF and returns to the same IRF within 3 consecutive calendar days, the IRF should combine the interrupted stay into a single claim and receive a single discharge payment.

The OIG determined that the correct value of the stays was $17.5 million, rather than the $21.7 million that the IRFs billed.  As a result, Medicare made net overpayments of $4.2 million to the IRFs.  The payment errors occurred because the IRFs did not have the necessary controls to identify or correctly bill interrupted stays.  Additionally, until April 2005, the Common Working File did not have an edit designed to identify all interrupted stays billed as two or more claims.  After its adoption, the new Common Working File edit effectively detected incorrectly billed interrupted stays and prevented overpayments to IRFs.

The OIG recommended that CMS direct its fiscal intermediaries to recover the $4.2 million in net overpayments that their review identified. In its written comments on OIG’s draft report, CMS concurred with the OIG’s recommendation.