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Feeley & Driscoll's OIG Update: September 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. Review of Head Start Health and Safety Standards at Brooklyn Child and Family Services, Inc.As part of a series of reviews requested by the Administration for Children and Families, Office of Head Start, the OIG found that Brooklyn Child and Family Services, Inc. (the Grantee), located in New York State, did not fully comply with Federal and State requirements on ensuring the health and safety of children in its care. The major objectives of the Head Start program include promoting school readiness and enhancing the social and cognitive development of low-income children by providing health, educational, nutritional, and social services. As of July 2009, the Grantee's files showed that the Grantee did not obtain timely criminal background checks on 21 of its 36 Head Start employees. In addition, the Grantee's childcare facility did not meet all Federal Head Start and State regulations on protecting children from unsafe materials and equipment. The Grantee's failure to follow these requirements jeopardized the health and safety of children in its care. The OIG recommended that the Grantee develop and consistently follow procedures to ensure that (1) all employee files contain documentation of timely criminal background checks and (2) all unsanitary and unsafe conditions are corrected. The Grantee concurred with their findings and described its completed and ongoing actions to address the deficiencies that the OIG identified. > Click here to view the full report 2. Review of Sterling Life Insurance Company's Internal Controls To Guard against Fraud, Waste, and Abuse for the Medicare Part D ProgramSterling Life Insurance Company (Sterling) had several internal control weaknesses that compromised its ability to detect, correct and prevent fraud, waste and abuse in the Part D program during the period of July 1, 2007, through June 30, 2009. Specifically, Sterling did not (1) ensure that its employees completed compliance training, (2) require its contracted entities to provide compliance training to their employees, (3) perform monitoring activities of its contracted entities, or (4) have a formal compliance committee. As a result, Sterling compromised its ability to detect, correct, and prevent fraud, waste and abuse in the Part D program and increased the risk that improper payments may have occurred. > Click here to view the full report 3. Medicare Part B Carrier Payments for Neulasta Injections in Pennsylvania for Calendar Years 2004 Through 2007Highmark Medicare Services overpaid providers $10,600 for six Medicare payments for Neulasta injection claims submitted by four providers during calendar years 2004 through 2007, which remained outstanding at the time of their audit. As a result of their audit, Highmark recovered the $10,600 in overpayments from the four providers. In addition, Highmark recovered $7,000 in overpayments during the audit. > Click here to view the full report 4. Review of Medicaid Funding for Emergency Services Provided to Nonqualified AliensOf the 391 claims the OIG reviewed totaling $2.4 million, Florida made unallowable Medicaid payments totaling $98,000 for 33 claims for services to nonqualified aliens that did not meet the State's definition of emergency care. > Click here to view the full report 5. Review of Medicaid Settlement of the Medical University of South Carolina Medical Center for Fiscal Year Ended June 30, 2008The Medical University of South Carolina (an academic health science center with a 700-bed hospital) generally received Medicaid inpatient payments in accordance with applicable Federal and State Laws, regulations, and guidance. However, 1 unallowable claim in their sample of 100 claims resulted in an erroneous outpatient charge of $3,000. > Click here to view the full report 6. Results of Limited Scope Review at Whitney M. Young, Jr., Health Center, Inc.Based on their assessment, Whitney M. Young, Jr., Health Center, Inc.'s (Whitney) financial viability may be adversely impacted by its financial condition in CYs 2007 and 2008. Whitney, Capitol Area, NY, received $1.3 million in Recovery Act funds during calendar year 2009. During this period, Whitney's expenditures exceeded revenues and its liabilities significantly increased. Moreover, the OIG noted issues related to Whitney's accounting system, procurement practices, Recovery Act reporting, and whistleblower process. In addition, Whitney's inventory records did not include all required elements, and written procedures were not established for periodically performing a physical inventory. Finally, Whitney's fees for patients with income at or below established Federal guidelines were not always correctly calculated. > Click here to view the full report 7. Review of Pennsylvania's Compliance With the Prompt Payment Requirements of the American Recovery and Reinvestment Act of 2009The OIG’s review found that Pennsylvania complied with the prompt pay requirement for receiving an increased Federal medical assistance percentage (FMAP) under the American Recovery and Reinvestment Act of 2009 (Recovery Act) for claims received on all days from February 16, 2009, through September 30, 2009. In addition, all practitioner, nursing facility, and hospital claims received after May 31, 2009, met the requirements for an increased Federal share. Pursuant to the Social Security Act, the Federal Government pays its share of a State's medical assistance expenditures under Medicaid based on the FMAP, which varies depending on the State's relative per capita income. For the recession adjustment period (October 1, 2008, through December 31, 2010), the Recovery Act provides an estimated $87 billion in additional Medicaid funding based on temporary increases in States' FMAPs. Federal regulations require State Medicaid agencies to pay 90 percent of all clean claims from practitioners within 30 days of the date of receipt (the prompt pay requirement). A clean claim is a claim that can be processed without obtaining additional information from the provider or a third party. The State did not meet the 30-day prompt pay requirement for claims received on any day from January 20, 2009, through February 15, 2009, and for claims received on November 29, 2008, and December 13, 2008. However, during the OIG’s review, the State agency requested a waiver of the prompt pay requirement for claims submitted by practitioners that were received by the State agency before February 18, 2009. The Centers for Medicare & Medicaid Services granted the waiver; therefore, the OIG have no recommendations. > Click here to view the full report 8. Results of Limited Scope Review of Hudson River HealthCare, Inc.'s Process for Compiling and Reporting Selected Recovery Act DataHudson River HealthCare, Inc's (Hudson River) processes for reporting selected data elements generally provided reasonable assurance that it complied with section 1512 requirements of the American Recovery and Reinvestment Act of 2009 (Recovery Act). Specifically, Hudson River accurately reported funds received, funds expended, project status, and the final project report indicator. However, Hudson River overstated the number of jobs retained in the second reporting period by 38.02 full-time equivalents (FTE) and, in the third reporting period, overstated the number of jobs retained by 37.47 FTEs. The OIG recommended that Hudson River follow current Health Resources and Services Administration reporting guidance and ensure that similar errors are not made in subsequent reporting periods. In written comments on the OIG’s draft report, Hudson River concurred with their recommendations and described completed and ongoing actions to address their findings. > Click here to view the full report 9. End Stage Renal Disease Drugs: Facility Acquisition Costs and Future Medicare Payment ConcernsThe OIG found that 7 out of the 11 separately billable end stage renal disease (ESRD) drugs under review (including the 2 drugs accounting for the majority of expenditures) have seen a decrease in their average acquisition costs over the last several years. During this same period, the index on which CMS will soon base payment changes for ESRD drugs increased by 39 percent. Medicare currently pays ESRD dialysis facilities based on a prospective payment system, known as the composite rate. Drugs not covered under the composite rate, such as epoetin alfa and darbepoetin alfa, must be billed separately and are referred to as separately billable drugs. Medicare pays for most separately billable drugs furnished by independent and hospital-based dialysis facilities at 106 percent of their average sales prices (ASP). On January 1, 2011, Federal law will require CMS to begin implementation of a new system that combines composite rate payments with payments for items and services that are currently separately billable (including separately billable drugs) to create a single, bundled payment. Federal law will require that once the base rate for ESRD bundled payments takes effect, it be annually updated to reflect the changes over time in the prices of goods and services used to provide ESRD care. CMS has decided to base these price updates on wage and price proxy data from the Bureau of Labor Statistics. For the ESRD drugs portion of the new bundled rate, CMS plans to use the Producer Price Index (PPI) for Prescription Drugs to estimate price changes. This report (1) compares Medicare payment amounts for selected separately billable ESRD drugs to average acquisition costs for these drugs at dialysis facilities in the first quarter of 2009, (2) examines how facility acquisition costs for selected separately billable ESRD drugs have changed over the past several years, and (3) determines whether the method that CMS plans to use to update payments for separately billable ESRD drugs after 2011 is an accurate predictor of changes in facility acquisition costs. The OIG sent requests for cost information to the three largest independent dialysis companies, a random sample of independent facilities not owned by the three largest dialysis companies, and all hospital-based dialysis facilities. Using acquisition cost data from previous OIG reports, they compared the changes in acquisition costs for separately billable drugs in independent facilities to changes in the PPI from 2003 to the first quarter of 2009. The OIG found that aggregate acquisition costs for ESRD drugs at both types of dialysis facilities were below ASP-based Medicare payment amounts. The OIG also found that if CMS had used the PPI for Prescription Drugs to update payment amounts for epoetin alfa since 2003, total program payments to all independent dialysis facilities for the drug in the first quarter of 2009 alone would have been $113 million higher than actual payments under the current ASP-based system. The OIG recommend that CMS develop a more accurate method for estimating changes in the prices of ESRD drugs. CMS did not concur with their recommendation, stating that it believes that future ESRD drug price growth will more closely reflect market-based price drivers, such as those measured by the PPI for Prescription Drugs. > Click here to view the full report 10. Results of Limited Scope Review at District of Columbia Public SchoolsThe OIG reviewed the financial conditions at the District of Columbia Public Schools (DCPS) Head Start Program, as requested by the Administration for Children and Families (ACF), Office of Head Start, for use in its overall assessment of Head Start grantees that have applied for additional funding under the American Recovery and Reinvestment Act of 2009 (Recovery Act). Based on the OIG’s assessment, the OIG believe that the DCPS Head Start program currently does not have the capacity to manage and account for Federal funds and is not capable of operating a Head Start program in accordance with Federal regulations. The OIG’s review identified weaknesses relating to the DCPS Head Start program's financial management system and program governance. The OIG recommended that ACF, in determining whether DCPS should be awarded additional Head Start and Recovery Act grant funding, consider the information presented in this report in assessing DCPS's ability to account for and manage Federal funds and operate a Head Start program. In written comments on their draft report, DCPS described the actions that it has taken to correct the weaknesses identified in this review and stated that it has been working with ACF over the past 6 months to develop a plan of action that will strengthen the DCPS Head Start program. > Click here to view the full report 11. Results of Limited Scope Review at Community Action of East Central Indiana, Inc.Based on their assessment, Community Action of East Central Indiana, Inc. (CAECI), has shown certain trends for net assets and debt that may undermine the grantee's fiscal stability. With the assistance of Indiana Housing and Community Development Authority (IHCDA) and Administration for Children and Families (ACF) officials to overcome these deteriorating conditions, CAECI has the ability to manage and account for Federal funds and is capable of operating a Community Services Block Grant (CSBG) program in accordance with Federal regulations. During their review, the OIG noted weaknesses related to fiscal status, timely accounting functions, composition of the Board of Directors, a lack of written policies and procedures for Federal Deposit Insurance Corporation (FDIC) deposit limits, use of consultants, Recovery Act reporting, and security to prevent damage to its property. The OIG recommend that IHCDA and ACF consider the information presented in this report in assessing CAECI's ability to operate a Community Action Agency in accordance with Federal regulations. > Click here to view the full report 12. Review of Medicaid Overpayments Identified by the Illinois Division of Rehabilitation Services for Services Provided From December 1, 1999, Through December 31, 2008The Illinois Department of Health and Human Services (the State agency) did not report all Medicaid overpayments on the CMS-64 in accordance with Federal requirements. Based on sample results, the OIG estimate the State agency did not reimburse $733,000 ($368,000 Federal share) for overpayments claimed on behalf of beneficiaries who were institutionalized or otherwise not entitled to the services. > Click here to view the full report 13. Review of Vermont's Compliance With the "Reimbursement of State Costs for Provision of Part D Drugs" Medicare Demonstration Project RequirementsThe Department of Vermont Health Access complied with certain provisions of the Medicare demonstration project requirements. However, the State agency was reimbursed $70,000 for drugs excluded from Medicare Part D reimbursement. > Click here to view the full report |
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