Feeley & Driscoll's OIG Updates: June 11, 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 Medicaid Overpayments at North Country Associates, Inc., for Calendar Years 2004 Through 2006

Maine made overpayments totaling $488,000 ($314,000 Federal share) to North Country Associates, Inc., during calendar years 2004-2006 because Maine did not adjust its Medicaid per diem payments by the amount of beneficiaries' cost-of-care contributions from other resources, such as Social Security and pensions.

>Click here to view the full report

2. Review of Medicaid Outpatient Drug Expenditures in the State of New York for the Period October 1, 2003, Through September 30, 2005

The OIG found that New York claimed Medicaid reimbursement for $1.2 million (Federal share) in fiscal years 2004 and 2005 for outpatient expenditures for drug products that were not eligible for Medicaid coverage.  In addition, of the $10.1 billion ($5.2 billion Federal share) in claims submitted by the State for Medicaid reimbursement, $16.2 million (Federal share) represented expenditures for drug products that were not listed on the CMS quarterly drug tape, which lists all covered outpatient drugs.  Because the State did not verify whether the drugs missing from the tapes were eligible for Medicaid coverage, these drug expenditures may not be allowable for Medicaid reimbursement.  For the remainder of the $10.1 billion ($5.2 billion Federal share) claimed, the OIG identified no other errors.

The OIG recommended that the State (1) refund $1.2 million to the Federal Government for drug expenditures that were not eligible for Medicaid coverage; (2) work with CMS to resolve $16.2 million in payments for drugs that were not listed on the quarterly drug tapes and, therefore, may not have been eligible for Medicaid reimbursement; and (3) strengthen internal controls to ensure that claimed Medicaid drug expenditures comply with Federal requirements.  The State generally agreed with the OIG’s first and second recommendations and agreed with their third recommendation. 

>Click here to view the full report

3. Review of Oxaliplatin Claims Processed by National Government Services for Calendar Years 2004 and 2005

For all 88 payments reviewed, 10 hospitals billed National Government Services for the incorrect number of service units of oxaliplatin.  As a result, the hospitals received overpayments totaling $2.2 million during calendar years 2004 and 2005.  These overpayments occurred primarily because the hospitals did not update their systems following a change in Medicare billing guidance. 

The OIG recommended that National Government Services recover the $2.2 million in overpayments to hospitals.  In written comments on their draft report, National Government Services agreed with their finding and recommendation and said that it had recouped all of the outstanding provider overpayments.

>Click here to view the full report

4. Review of California's Compliance With Demonstration Project Requirements for Reimbursement of State Costs for Provision of Medicare Part D Drugs (Claims Processed Through the Medicaid Management Information System)

For the $55.8 million in drug claims processed through the Medicaid Management Information System, the California Department of Health Care Services (the State agency) complied with certain provisions of the Medicare "Section 402 Demonstration Application" when claiming drug costs for full-benefit dually eligible beneficiaries.  However, the State agency claimed drug costs to both the Medicaid program and the Medicare demonstration project.  Subsequently, the State agency adjusted the Forms CMS-64 to remove demonstration project costs.

>Click here to view the full report

5. Performance Data for the Senior Medicare Patrol Projects:  May 2009 Performance Report

The Senior Medicare Patrol Projects receive grants from AoA to recruit retired professionals to serve as educators and resources in helping beneficiaries to detect and report fraud, waste, and abuse in the Medicare program.  At least one project is located in each of the 50 States, as well as in the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. 

In 2008, the 57 projects had a total of 4,685 active volunteers.  These volunteers educated beneficiaries in 6,869 group education sessions and held 24,505 one-on-one counseling sessions.  In addition, the projects conducted 785,468 media outreach events and 5,742 community outreach education events.  Medicare funds recovered attributable to the projects were $21,068 and total savings to Medicare, Medicaid, beneficiaries, and others were $65,735.  The projects had fewer active volunteers in 2008, compared to the number in 2007.  In addition, Medicare funds recovered and total savings to Medicare, Medicaid, beneficiaries, and others were lower in 2008, compared to totals in 2007.

In December 2005, AoA requested that OIG continues to collect and report performance data for the Senior Medicare Patrol Projects to support AoA's efforts to evaluate and improve the performance of these projects.  OIG agreed to collect performance data every 6 months but to report the data on an annual basis.

The OIG continue to emphasize that the number of beneficiaries who have learned from the Senior Medicare Patrol Projects to detect fraud, waste, and abuse and who subsequently call the OIG fraud hotline or other contacts cannot be tracked.  Therefore, the projects may not be receiving full credit for savings attributable to their work.  In addition, the projects are unable to track substantial savings derived from a sentinel effect whereby fraud and errors are reduced in light of Medicare beneficiaries' scrutiny of their bills.

>Click here to view the full report

6. Independent Contractor's Review of Durable Medical Equipment Claims From the Fiscal Year 2008 Comprehensive Error Rate Testing Program

The OIG conducted their audit at the request of the Senate Committee on Finance.  Palmetto GBA (Palmetto) complied with its CMS contract in performing medical reviews of a subsample of claims from the FY 2008 durable medical equipment (DME) sample, but Palmetto's results did not provide assurance that the FY 2008 DME error rate was accurate.  The Comprehensive Error Rate Testing (CERT) program was established to produce a Medicare fee-for-service error rate, which CMS must submit to Congress annually.  To determine the error rate for FY 2008, CMS's CERT contractor conducted medical record reviews of a random sample of paid claims.  Palmetto reviewed the CERT contractor's payment determinations. 

Palmetto found that 175 of the 250 sampled claims were in error, significantly exceeding the 23 errors found by the CERT contractor.  After further review, the CERT contractor agreed with 17 of Palmetto's additional error determinations (for a total of 40 error determinations) but disagreed with the remaining 135 error determinations.  Most of Palmetto's error determinations were based on insufficient documentation to establish medical necessity. 

The OIG recommended that CMS require the CERT contractor to (1) develop a corrective action plan to reduce its number of incorrect determinations and (2) perform a complex medical review by obtaining and reviewing all medical records from all relevant providers to support the medical necessity of DME items.  In comments on their draft report, CMS concurred with their findings and recommendations and outlined the steps it has taken to begin implementing their recommendations.

>Click here to view the full report

7. Review of the Long-Term Care, Managed Care Program Costs Claimed by the Utah Department of Health

The State did not ensure that payments made under non-risk contracts for long-term care (LTC) services were equal to or less than the upper payment limits.  The State lacked policies and procedures to ensure that LTC payments made to contractors were equal to or less than the upper payment limits.  Under a non-risk contract, the contractor (1) is not at financial risk for changes in utilization or for service costs incurred that are equal to or less than upper payment limits specified in Federal regulations and (2) may be reimbursed by the State for the incurred costs, subject to specified limits.

Because the State could not ensure that the costs claimed for LTC services were equal to or less than the upper payment limits, the OIG is unable to express an opinion on the $27.4 million of Federal reimbursement that the State received for the costs of LTC services for the period July 1, 2000, through December 31, 2005.  Therefore, the OIG is setting aside these costs for adjudication by the Centers for Medicare & Medicaid Services (CMS).

The OIG recommended that the State work with CMS to (1) resolve the allowability of $27.4 million in Federal reimbursement for LTC services that the OIG set aside and (2) review claims subsequent to their audit period through the end of the program in 2007 and return to CMS any overpayments identified subject to the upper payment limits.  In written comments on their draft report, the State did not concur with the OIG’s findings or recommendations.  After reviewing the State’s comments, the OIG slightly modified their second recommendation.  However, the State did not provide information that caused the OIG to change their findings or remaining recommendation.

>Click here to view the full report

8. Review of the Calculations of Temporary Increases in Federal Medical Assistance Percentages Under the American Recovery and Reinvestment Act

The Office of the Assistant Secretary for Planning and Evaluation (ASPE) calculated temporary Federal Medical Assistance Percentage (FMAP) increases for the first and second quarters of Federal fiscal year (FY) 2009 for the 50 States and the District of Columbia in accordance with the American Recovery and Reinvestment Act (ARRA).  The ARRA, enacted February 17, 2009, provides fiscal relief to States to protect and maintain State Medicaid programs in a period of economic downturn. 

For the recession adjustment period (October 1, 2008, through December 31, 2010), the ARRA provides $87 billion in additional Medicaid funding based on temporary increases in States’ FMAPs.  The Federal Government pays its share of States’ medical assistance expenditures based on the FMAP, which varies depending on each State’s relative per capita income.

>Click here to view the full report

9. Medicare Part D Payments for Beneficiaries in Part A Skilled Nursing Facility Stays in 2006

Medicare Part D paid for 1.2 million drugs, amounting to $75 million, for beneficiaries in Part A SNF stays in 2006.  The majority of these payments were most likely inappropriate.

Medicare Part D covers most prescription drugs; however, it excludes drugs that are covered under Medicare Parts A or B.  Specifically, Part D excludes drugs for beneficiaries in Part A SNF stays if the drugs were for use in the facility or to facilitate the beneficiaries' discharge.  These drugs are covered under Part A, except for a few drugs that are covered under Part B.  CMS has identified duplicate payments by Medicare Parts A and D as a potential vulnerability.

Sixty percent of the drugs Part D paid for while beneficiaries were in Part A SNF stays in 2006 were dispensed by long-term care pharmacies.  These pharmacies dispense drugs for use in long-term care settings, including SNFs.  Because these drugs were most likely dispensed for use in the facility during a Part A SNF stay, Part D payments for them, which amounted to $41.3 million, were most likely inappropriate.  The remaining 40 percent of drugs paid for by Part D for beneficiaries in Part A SNF stays were dispensed by retail and other types of pharmacies.  If these drugs were for use in the facility or were to facilitate the beneficiaries' discharge, then Part D payments were also inappropriate.  Nearly every SNF and half of all pharmacies had beneficiaries who had a drug paid for by Part D during their Part A SNF stay.  At the same time, a small number of SNFs and pharmacies were responsible for a large percentage of these Part D payments.

Based on these findings, the OIG recommend that CMS ensure that Part D payments for drugs for beneficiaries in Part A SNF stays are appropriate.  More specifically, CMS should provide additional guidance about when Parts A and D can pay for drugs for beneficiaries preparing for discharge; educate SNFs, pharmacies, and Part D sponsors that drugs covered under Parts A or B for beneficiaries in SNF stays are not eligible for coverage under Part D; implement retrospective reviews to prevent inappropriate Part D payments for drugs for this population; and follow up with the SNFs and pharmacies that were responsible for a large percentage of Part D payments for beneficiaries in Part A SNF stays.  CMS concurred with the three recommendations the OIG had in their draft report.  However, it raised several concerns and in response the OIG clarified the language in the report and added a recommendation that CMS provide additional guidance that clarifies the circumstances under which Parts A and D can pay for drugs for beneficiaries preparing for discharge.

>Click here to view the full report

10. Fraud and Abuse Safeguards for State Medicaid Nonemergency Medical Transportation Services

OIG found that States concentrate their Medicaid Nonemergency Medical Transportation (NEMT) safeguard activities on screening providers, requiring prior approval for services, and implementing methods to prevent and detect improper payments.  Depending upon the State, responsibility for conducting these activities lies with the State Medicaid agency itself, other State agencies, contracted transportation brokers, or some combination of these entities.  The 29 States that use brokers to administer their NEMT benefit reported using multiple techniques to monitor their brokers, including complaint investigation, periodic contract renewal, and broker reporting requirements. 

Federal regulations (42 CFR § 431.53) require each State to ensure that Medicaid beneficiaries have necessary transportation to and from medical providers and to describe, in their State plans, the methods that the State will use to meet this requirement.  Federal regulations (42 CFR § 455.13) also require that each State Medicaid agency establish an integrity program for identifying and investigating suspected fraud and abuse cases and referring them to law enforcement.  If a State detects evidence of potential fraud and abuse, it must refer those cases to the State Medicaid Fraud Control Unit (MFCU) or other appropriate law enforcement agency, such as a local district attorney, for investigation.

OIG also found that State MFCUs investigated a combined total of 509 NEMT fraud and abuse cases from 2004 to 2006, with the most common types involving billing for services not rendered, unspecified overbilling, and upcoding.  Of the 509 cases reported by State MFCUs, 73 percent were closed and the remaining 27 percent were open at the time the State MFCUs submitted data to OIG during the second half of 2007.  Among the closed cases, 40 percent were dismissed because the allegations were unsubstantiated after investigation and another 18 percent were investigated and closed without prosecution.  Twelve percent of closed cases resulted in criminal convictions, and parties agreed to settlements in another 10 percent of closed cases.

>Click here to view the full report