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Feeley & Driscoll's OIG Update: November 2010 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.
1. St. Joseph Medical Center in Maryland to Pay U.S. $22 Million to Resolve False Claims Act Allegations IIn the announcement, Inspector General Daniel R. Levinson stated "Payoffs to influence health care decision-making too often result in inappropriate, unnecessary and harmful medical practices. OIG is committed to protecting patients from needless medical procedures, such as the insertion of unnecessary cardiac stents -- as is alleged in this case." Of particular note to OIG, Saint Joseph's signed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). It requires SJMC to engage in activities that will help ensure accurate billing and appropriate relationships with referral sources. The CIA also addresses patient care issues by requiring the hospital to: appoint physician executives to oversee medical staff quality-of-care matters; hire a Peer Review Consultant to evaluate SJMC's peer review practices; and engage an Independent Review Organization to perform a Cardiac Catheterization Procedures Review, evaluating and analyzing the medical necessity and appropriateness of interventional procedures performed at SJMC. The hospital is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for major noncompliance with this CIA and subject to stipulated penalties for less significant noncompliance. > Click here to view the full report 2. Review of Personal Care Services Provided by Tri-State Home Health and Equipment Services, Inc., in the District of ColumbiaThe OIG found that from July 1, 2006, through September 30, 2007, the District of Columbia (the District) paid Tri-State Home Health and Equipment Services, Inc. (Tri-State), $1.6 million ($1.1 million Federal share) for personal care services that did not comply with the Medicaid plan or waiver requirements for allowable hours of service or that were not provided. The District's Medicaid plan authorizes personal care services, which provide assistance with activities of daily living including bathing, grooming, and eating, for up to 8 hours per day and 1,040 hours during any 12-month period. The District also provides personal care services through a section 1915(c) waiver that allows up to 16 hours of services per day. The OIG set aside for CMS's adjudication $1.2 million ($808,000 Federal share) paid on behalf of 44 beneficiaries for whom Tri-State claimed hours of service under the waiver. Tri-State documented that it had submitted requests for waiver services for these beneficiaries but did not have evidence that it had received preauthorization for services under the waiver. The OIG also determined that the District did not ensure that all of Tri-State's personal care aides met the District's qualification requirements.
The District concurred with their recommendations and described the actions that it had taken, or planned to take, to address them. > Click here to view the full report 3. Review of Contract Signatures for the Hurricane Katrina Health-Care-Related Professional Workforce Supply Grant for the Greater New Orleans AreaTheir audit found that from March 2007 through January 2009, Louisiana's Bureau of Primary Care and Rural Health (the Bureau) paid $330,000 in grant funds to seven practitioners who may not have agreed to comply with the grant's terms and conditions. CMS awarded the Bureau a Professional Workforce Supply Grant (the grant) to restore access to health care in communities impacted by Hurricane Katrina. Interested practitioners were required to submit applications for funding and sign contracts. The OIG found that seven contracts did not contain authentic signatures. These errors occurred because the Bureau did not have adequate policies and procedures to ensure that employees processing the contracts were obtaining authentic signatures on the agreements from both parties before payments were made. The OIG recommended that the Bureau:
The Bureau also said that it had reviewed the remaining contracts but provided no supporting documentation. Nothing in the Bureau's comments caused the OIG to revise their recommendations. > Click here to view the full report 4. Results of Limited Scope Review at ACTION, Inc. of Delaware and Grant CountiesBased on their assessment, ACTION, Inc. of Delaware and Grant Counties (the Grantee), located in Muncie, Indiana, and has shown signs of financial distress. If it makes progress in implementing certain financial and programmatic improvement recommendations, it will have the capacity to manage and account for Federal funds and to operate its Community Service Block Grant program (CSBG) in accordance with Federal regulations. During their review, the OIG noted weaknesses related to financial viability, safeguarding of Federal funds, the whistleblower process, and inventory of property. In determining whether the Grantee is appropriately managing and accounting for the Recovery Act grant funding, the OIG recommended that the Administration for Children and Families consider the information presented in this report in assessing the Grantee's ability to operate a CSBG program in accordance with Federal regulations and work with the State to address noted weaknesses. > Click here to view the full report 5. The Use of Payment Suspensions to Prevent Inappropriate Medicare PaymentsThe OIG found that CMS used payment suspensions in 2007 and 2008 almost exclusively as a tool to fight fraud. The OIG also found that CMS guidance for payment suspensions provides incomplete or inconsistent requirements. Since the time when the OIG collected data for this evaluation, the Patient Protection and Affordable Care Act (hereinafter referred to as the Affordable Care Act) established new provisions for payment suspensions. On September 23, 2010, CMS issued proposed regulations for these provisions. The information in this report may be useful to CMS when it finalizes these regulations and develops guidance for the new provisions. CMS may suspend payments to any Medicare provider when it possesses reliable information that the provider was overpaid for previously submitted claims. CMS imposes suspensions under any of three circumstances: (1) fraud or willful misrepresentation, (2) when an overpayment exists but the amount has not been determined, and (3) when payments made or to be made may be incorrect. The OIG found that Part B providers composed 85 percent of the 253 payment suspensions that CMS imposed in 2007 and 2008. Overpayments to providers in those years totaled at least $206 million, and CMS extended more than half of the suspensions. The OIG also found that the great majority of providers that CMS suspended in 2007 and 2008 exhibited characteristics that suggest fraud. CMS recommends that providers suspended due to fraud receive no advance notice; in all but three of the suspensions, no such advance notice was given. Reliable information included evidence of questionable billing patterns for 74 percent of suspensions and information from beneficiaries and other providers for 63 percent of suspensions. Prior to their suspensions, 24 percent of providers billed Medicare despite having vacant physical locations. Lastly, the OIG found that CMS provides some inconsistent guidance regarding payment suspensions, particularly in specifying the types of information that its contractors should submit with a request for a suspension, as well as in describing the circumstances in which an extension is permitted. The OIG conclude that payment suspensions were used in 2007 and 2008 almost exclusively as a tool to fight fraud. The Affordable Care Act states that a provider's payments may be suspended based on a credible allegation of fraud, unless there is good cause not to suspend such payments. The statute also requires CMS to consult with OIG in determining whether a credible allegation of fraud exists. In the guidance that CMS develops for the new provisions for payment suspensions, CMS could also address the inconsistencies that this report identifies. > Click here to view the full report 6. Comparison of First-Quarter 2010 Average Sales Prices and Average Manufacturer Prices: Impact on Medicare Reimbursement for Third Quarter 2010The OIG identified a total of 38 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 first quarter of 2010. Of these 38 HCPCS codes, 13 had complete AMP data (i.e., AMP data for every drug product that CMS used to establish reimbursement amounts). If reimbursement amounts for all 13 codes with complete AMP data had been based on 103 percent of the AMPs during the third quarter of 2010, the OIG estimate that Medicare expenditures would have been reduced by almost $1 million in that quarter alone. By law, the Office of Inspector General (OIG) must notify the Secretary of Health & 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, the Secretary may disregard the ASP for the drug when setting reimbursement and shall substitute the payment amount with the lesser of either the widely available market price or 103 percent of the AMP. This is OIG's 18th report comparing ASPs to AMPs. Although CMS has yet to make any changes to Part B drug reimbursement as a result of these studies, the agency published a proposed rule in July 2010 that, among other things, specifies the circumstances under which AMP-based price substitutions would occur. For example, CMS would lower reimbursement amounts only for HCPCS codes with complete AMP data that meet the 5-percent threshold in two consecutive or three of four quarters. If CMS's proposed price substitution policy had been in effect, reimbursement amounts for 10 of the 13 drugs with complete AMP data would have been reduced. The remaining 25 of 38 HCPCS codes also met the 5-percent threshold in the first quarter of 2010 but did not have AMP data for every drug product that CMS used when calculating reimbursement. Although CMS's proposed price substitution policy would not apply to codes with partial AMP data, price reductions for 7 of the 25 HCPCS codes may be legitimately warranted because missing AMPs likely had little influence on the pricing comparison results for these codes. The OIG could not compare ASPs and AMPs for an additional 68 HCPCS codes because AMP data were not submitted for any of the national drug codes that CMS used to calculate reimbursement. Manufacturers for 23 percent of those 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 pricing data. > Click here to view the full report 7. Appropriations Funding for National Heart, Lung, and Blood Institute Contract HHSN268-2008-00012C with Information Management Services, Inc.Their review found that during fiscal years 2008 and 2009, NIH’s National Heart, Lung, and Blood Institute (NHLBI) did not comply with the time requirements and may not have complied with the amount requirements specified in appropriations statutes in administering contract HHSN268-2008-00012C (the Contract) with Information Management Services, Inc. An agency may obligate appropriations for goods and services when (1) the purpose of the obligation or expenditure is authorized, (2) the obligation occurs within the time limits for which the appropriation is available, and (3) the obligation and expenditure are within the amounts provided by Congress. Federal statutes specify that a fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in or continuing to exist in the appropriation’s period of availability. The Antideficiency Act prohibits an agency from obligating or expending funds in advance of or in excess of an appropriation unless specifically authorized by law. The OIG recommended that NHLBI:
NIH concurred with their findings and recommendations. > Click here to view the full report 8. Oversight and Evaluation of the Fiscal Year 2008 Payment Error Rate Measurement ProgramTheir review found that CMS could not be assured that the Payment Error Rate Measurement (PERM) program produced a reasonable estimate of improper payments. Specifically, State One did not maintain hospital information on a claim-by-claim basis, and the OIG were not able to reconcile the State universes from four other States to their Forms CMS-64. The States’ Medicaid fee-for-service and managed care universes for the FY 2008 PERM program were or may have been incomplete or inaccurate.
CMS agreed with their recommendations and discussed the corrective actions it had taken or plans to take in response. > Click here to view the full report 9. Review of Indiana's Reporting Fund Recoveries for Federal and State Medicaid Programs on the Form CMS-64 for Federal Fiscal Years 2000 through 2008For Federal fiscal years (FY) 2000 through 2008, the OIG estimated that Indiana did not report Medicaid overpayments totaling $61.6 million ($38.9 million Federal share) in accordance with Federal requirements. Also, the State did not report interest it collected on 24 overpayments totaling $62,000 ($39,000 Federal share) in accordance with Federal requirements. Federal law requires States to refund the Federal share of Medicaid overpayments. In addition, Federal regulations require States to refund interest earned on overpayments before requesting additional Federal funds. The OIG recommended that Indiana:
In written comments on their draft report, the State agreed with their third recommendation. Regarding the first recommendation, the State provided additional documentation and indicated that most of the overpayments exceeding $1 million were repaid, reported, or resolved. Regarding the second recommendation, the State said it "routinely uses interest assessment as a form of settlement with providers." As a result of the additional documentation, the OIG revised their findings and recommendations to exclude $26.9 million in overpayments. The OIG maintain that their findings and recommendations for the remaining $61.6 million in overpayments are consistent with Federal requirements and that the State's policies regarding interest earned on overpayment amounts are not in accordance with Federal regulations. 10. Review of the Pension Segmentation Requirements for the Employees' Pension Plan at Wisconsin Physicians Service Insurance Corporation for the Period of January 1, 1989, to January 1, 2008Wisconsin Physicians Service Insurance Corporation (WPS), Centers for Medicare & Medicaid Services (CMS) contractor, overstated the Medicare segment pension assets by $65,000 for the period of January 1, 1989, to January 1, 2008. WPS administered Medicare Part A and Part B operations under cost reimbursement contracts with CMS. > Click here to view the full report 11. Review of Payments Exceeding Charges for Outpatient Services Processed by Wisconsin Physicians Service Insurance Corporation for Calendar Years 2004 through 2007The OIG found that certain Medicare payments in excess of charges that Wisconsin Physicians Service Insurance Corporation (WPS), a Medicare contractor, made to hospitals for outpatient services for calendar years 2004 through 2007 were incorrect. The incorrect payments included overpayments totaling $9.2 million, which hospitals had not refunded by the start of their audit. Medicare uses the hospital outpatient prospective payment system to pay hospitals for outpatient services. In this method of reimbursement, the Medicare payment is not based on the amount that the hospital charges. Consequently, the billed charges (the prices that a hospital sets for its services) do not affect the current Medicare payment amounts. Billed charges generally exceed the amount that Medicare pays the hospital. Therefore, a Medicare payment that significantly exceeds the billed charges is at high risk of overpayment. The incorrect payments involved excessive units of service, Healthcare Common Procedure Coding System codes that did not reflect the procedures performed, unallowable services, and lack of supporting documentation. The OIG recommended that WPS:
In response, WPS described actions that it had taken or planned to take to address their recommendations. > Click here to view the full report 12. Review of Selected Payments for Inpatient Services Processed by Noridian Administrative Services, LLC, for Calendar Years 2006 through 2008 Their audit found that Noridian Administrative Services, LLC (Noridian), a Medicare contractor, made overpayments totaling $715,000 to hospitals for inpatient services for calendar years 2006 through 2008. Noridian made these incorrect payments because neither the Fiscal Intermediary Standard System nor the Common Working File had sufficient edits in place during their audit period to prevent or detect the incorrect payments. > Click here to view the full report 13. Review of Colorado Medicaid Payments for Home Health Agency Claims > Click here to view the full report 14. Review of Medicare Contractor Payments for Neulasta Injections in Alaska, Arizona, and Washington for Calendar Years 2004 through 2007 This report consolidates the results of their reviews of six selected Medicare Part B providers in Alaska, Arizona, and Washington that billed Medicare for Neulasta injections. For 156 Medicare claims reviewed, the 6 providers billed Medicare for the incorrect number of service units of Neulasta. Consequently, during calendar years 2004 through 2007, Medicare contractors overpaid these providers $153,000. > Click here to view the full report 15. Review of the Centers for Disease Control and Prevention's Compliance with Appropriations Laws and Acquisition Regulations-Contractor E Audit In this congressionally requested review, the OIG found that a 2003 CDC information technology service contract and six sampled task orders awarded to a company referred to as "Contractor E" did not fully comply with appropriations laws and acquisition regulations with respect to contract funding and pricing. Specifically, for two of the six task orders, CDC used annual appropriations to pay for expenses incurred after the appropriations' 1-year period of availability had expired. Additionally, CDC did not sufficiently document price or cost analyses under all six task orders. As a result, CDC violated the bona fide needs statute by expending $231,000 of annual appropriations beyond their period of availability and did not ensure that the pricing of task orders and modifications totaling $21.5 million was fair and reasonable. The contract and sampled task orders complied with acquisition regulations with respect to competition, inherently governmental functions, and personal services. The OIG recommended that CDC:
In response, CDC described its corrective actions to address each of their recommendations. > Click here to view the full report 16. Review of the Centers for Disease Control and Prevention's Compliance with Appropriations Laws and Acquisition Regulations-Contractor D Audit In this congressionally requested review, the OIG found that a 2003 CDC information technology service contract and six sampled task orders awarded to a company referred to as "Contractor D" did not fully comply with appropriations laws and acquisition regulations with respect to contract funding and pricing. Specifically, for three of the six task orders, CDC used annual appropriations to pay for expenses incurred after the appropriations' 1-year period of availability had expired. Additionally, CDC did not sufficiently document price or cost analyses under all six task orders. As a result, CDC violated the bona fide needs statute by expending $1.6 million of annual appropriations beyond their period of availability and did not ensure that the pricing of task orders and modifications totaling $73 million was fair and reasonable. The contract and sampled task orders complied with acquisition regulations with respect to competition, inherently governmental functions, and personal services. The OIG recommended that CDC:
In response, CDC described its corrective actions to address each of their recommendations. > Click here to view the full report 17. Review of the Centers for Disease Control and Prevention's Compliance with Appropriations Laws and Acquisition Regulations-Contractor C Audit This congressionally requested review of CDC's contracting practices focused on a 2002 research and development contract awarded to a company referred to as "Contractor C." The OIG found that the contract did not fully comply with appropriations laws and acquisition regulations with respect to competition. Specifically, CDC awarded task orders to Contractor C that significantly exceeded the estimated contract cost without recompleting the contract. CDC's cumulative award of $13.4 million exceeded the estimated contract cost by $12.1 million because CDC failed to adhere to its procedures for periodically monitoring cumulative contract costs. By failing to do so, CDC violated the Federal Acquisition Regulation's requirement for full and open competition. As a result, CDC did not ensure that it obtained information related to the prevention of infectious diseases in the most economical and efficient manner. The contract complied with appropriations laws and acquisition regulations with respect to inherently governmental functions, personal services, pricing, and contract funding. The OIG recommended that CDC:
CDC concurred with their finding and recommendation and described the corrective actions that it was taking. > Click here to view the full report 18. Review of the Centers for Disease Control and Prevention's Compliance with Appropriations Laws and Acquisition Regulations-Contractor B Audit In this congressionally requested review, the OIG found that a 2002 CDC research and development contract awarded to a company referred to as "Contractor B" did not fully comply with appropriations laws and acquisition regulations with respect to pricing. Specifically, CDC did not perform cost analyses for four contract modifications that exceeded $650,000 each and that totaled $10.9 million. The failure to perform cost analyses occurred because CDC did not adhere to its policies and procedures for determining the reasonableness of contract modifications. By failing to perform cost analyses, CDC violated the Federal Acquisition Regulation. As a result, CDC did not ensure that it obtained vaccine safety research studies at fair and reasonable prices. The contract complied with appropriations laws and acquisition regulations with respect to competition, inherently governmental functions, personal services, subcontracting, additional performance activities, and contract funding. The OIG recommended that CDC:
CDC concurred with this recommendation but disagreed with the finding in their draft report that $290,000 was obligated in excess of available funds and with the related recommendations. After reviewing CDC's comments and additional documentation, the OIG agreed that the $290,000 was properly certified, and the OIG revised their final report accordingly. > Click here to view the full report
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