1. Results of Limited Scope Review at the Community Action Committee of Danbury, Inc.
2. Review of the Maine Department of Health and Human Services Buy-In of Medicare Parts A and B for the Period July 1, 2008, through December 31, 2009
3. CVS Pharmacy Inc. Agrees to Pay $17.5 Million to Resolve False Prescription Billing Case
4. Medicare Payments for Diagnostic Radiology Services in Emergency Departments
5. Appropriations Funding for National Institute of Allergy and Infectious Diseases Contract HHSN266-2006-00011C with SRI International
6. Florida's Monitoring of CSBG Funds Provided to Community Action Agencies Under the American Recovery and Reinvestment Act
7. Two Owners of Miami-Area Mental Health Care Corporation Plead Guilty to Orchestrating $200 Million Medicare Fraud Scheme
8. Result of Limited Scope Review at Tri-County Community Council, Inc.
9. Review of the United Planning Organization's Compliance with Health and Safety Regulations for Head Start Programs
10. Results of Limited Scope Review at Oakhurst Medical Centers, Inc.
11. Review of Title IV-E Foster Care Costs Claimed on Behalf of Delinquent Children in Los Angeles County, California
12. Review of the Qualified Pension Plan at Mutual of Omaha Insurance Company, a Terminated Medicare Contractor, for the Period January 1, 1992, to January 1, 2008

1. Results of Limited Scope Review at the Community Action Committee of Danbury, Inc.

The OIG reviewed the financial condition of the Community Action Committee of Danbury, Inc. (CACD), as part of a nationwide series of reviews of Community Action Agencies that have received funding under the American Recovery and Reinvestment Act of 2009.

The OIG believes that CACD is currently financially viable. Significant operating deficiencies existed at CACD that impact its ability to manage and account for Federal funds and its capability to carry out Community Services Block Grant (CSBG) Recovery Act programs in compliance with Federal requirements.

Specifically, CACD did not ensure that:

• Direct capital expenditures were approved in advance;

• Its subcontract award contained evidence of competitive bidding, a description of services, and that services were provided to eligible clients;

• Its payroll distribution process provided an after-the-fact certification of actual activity performed by salaried employees;

• Professional services and occupancy costs allocated to the CSBG Recovery Act program were supported properly;

• Its CSBG Recovery Act quarterly financial reports were supported by accounting records.

In addition, CACD did not fully comply with Federal requirements for segregation of duties and bank deposits. The deficiencies occurred because CACD did not establish adequate controls and procedures. As a result, CSBG Recovery Act funds may be at risk of not being properly accounted for or expended in accordance with Federal requirements.

The OIG recommends that the Administration for Children and Families work with Connecticut's Department of Social Services to ensure that CACD establishes adequate controls and procedures to comply with Federal requirements. In addition, the OIG recommends that CACD make financial adjustments or produce adequate documentation for unallowable services, activities, and costs.

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2. Review of the Maine Department of Health and Human Services Buy-In of Medicare Parts A and B for the Period July 1, 2008, through December 31, 2009

The State agency generally claimed Federal share for Medicare Part A and B premiums it paid on behalf of eligible Medicaid beneficiaries in accordance with Federal requirements. However, the State agency overstated the Federal share by making erroneous accounting entries when preparing the Form CMS-64. As a result, the State agency overstated its Federal claim for Medicare Parts A and B buy-in by a total of $1.4 million ($1.1 million Federal share).

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3. CVS Pharmacy Inc. Agrees to Pay $17.5 Million to Resolve False Prescription Billing Case

CVS Pharmacy Inc., the retail pharmacy division of CVS Caremark Corporation that operates more than 7,000 retail pharmacies in 41 states and the District of Columbia, has agreed to pay the United States and 10 states $17.5 million to resolve False Claims Act allegations, the Justice Department announced today.

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4. Medicare Payments for Diagnostic Radiology Services in Emergency Departments

In 2008, Medicare erroneously allowed 19 percent ($29 million) of claims for interpretation and reports for computed tomography (CT) and magnetic resonance imaging (MRI) and 14 percent ($9 million) of claims for interpretation and reports for x-rays in hospital outpatient emergency departments because of insufficient documentation.

The Social Security Act and CMS regulations govern Medicare payments for all radiology services and require that services be ordered by physicians, have documentation to support the claims, and be medically necessary. As a condition of fee schedule payment, services are required to contribute directly to the diagnosis or treatment of an individual beneficiary. Although CMS has not established required elements for interpretation and reports, the American College of Radiology has established suggested technical standards and practice guidelines for interpretation and reports for diagnostic services. These practice guidelines help practitioners deliver effective, efficient, consistent, and safe medical care.

Of the allowed Medicare claims for CTs and MRIs in hospital outpatient emergency departments in 2008, (1) 12 percent ($18 million) did not have physicians' orders as part of the medical record documentation and (2) 12 percent ($19 million) did not have documentation to support that interpretation and reports had been performed. Five percent ($7.3 million) had overlapping errors. Of the allowed Medicare claims for x-rays in hospital outpatient emergency departments in 2008, (1) 8.6 percent ($5.5 million) did not have physicians' orders as part of the medical record documentation and (2) 8.2 percent ($5.4 million) did not have documentation to support that interpretation and reports had been performed. Three percent ($1.9 million) of claims had overlapping errors. Although not erroneously allowed, 12 percent ($19 million) of CT and MRI claims and 16 percent ($10 million) of x-ray claims were for interpretation and reports that were performed after beneficiaries left emergency departments. CMS offers inconsistent payment guidance on the timing for interpretation. In 2008, approximately 71 percent of interpretation and reports for x-rays and 69 percent of interpretation and reports for CTs and MRIs did not follow one or more of the American College of Radiology-suggested documentation practice guidelines.

The OIG recommends that CMS:

• Educate providers on the requirement to maintain documentation on submitted claims;

• Adopt a uniform policy for single and multiple claims for interpretation and reports of diagnostic radiology services to require that claimed services be contemporaneous or identify circumstances in which non-contemporaneous interpretations may contribute to the diagnosis and treatment of beneficiaries in hospital outpatient emergency departments;

• Take appropriate action on the erroneously allowed claims identified in the OIG’s sample.

In its written comments on the report, CMS concurred with the first and third recommendations. CMS did not concur with the second recommendation. CMS indicated that it does not believe that a single billed interpretation must in all cases be contemporaneous with the beneficiary's diagnosis and treatment to contribute to that diagnosis and treatment. However, a uniform policy requiring that the interpretation and report be contemporaneous with, or, if not contemporaneous, demonstrably contribute to the beneficiary's diagnosis and treatment could reduce unexplained complexity in what is already a complicated billing system for medical diagnostics.

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5. Appropriations Funding for National Institute of Allergy and Infectious Diseases Contract HHSN266-2006-00011C with SRI International

The OIG’s review found that during fiscal years 2006 through 2009, NIH's National Institute of Allergy and Infectious Diseases (NIAID) did not comply with the time requirements and may not have complied with the amount requirements specified in appropriations statutes in administering Contract HHSN266-2006-00011C (the Contract) with SRI International. An agency may obligate appropriations for goods and services when:

• The purpose of the obligation or expenditure is authorized;

• The obligation occurs within the time limits for which the appropriation is available;

• And 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.

NIAID funded only $21.7 million of the $56.9 million Contract obligation with fiscal year 2006 appropriations. NIAID obligated a total of $16.8 million in violation of the bona fide needs rule: $11.6 million of fiscal year 2007 appropriated funds, $2.4 million of fiscal year 2008 appropriated funds, and $2.8 million of fiscal year 2009 appropriated funds. NIAID planned to obligate funds appropriated for the following year as well. Because the Contract was a nonseverable service contract (a single undertaking that provides for a single outcome chargeable to the fiscal year in which the contract was awarded), NIAID was required to record the full amount of the Contract using fiscal year 2006 appropriated funds. By not doing so, NIAID potentially violated the Antideficiency Act. (When services are severable they are continuing and recurring and chargeable to the fiscal year in which the services are provided.) NIAID complied with the purpose requirements of appropriations statutes.

The OIG recommends that NIAID:

• Deobligate $11.6 million of fiscal year 2007 funds, $2.4 million of fiscal year 2008 funds, and $2.8 million of fiscal year 2009 funds;

• Deobligate any additional funds appropriated for years other than fiscal year 2006 that NIAID may have obligated for the Contract after the OIG’s audit;

• Record the remaining $35.2 million of the $56.9 million Contract obligation against fiscal year 2006 funds;

• Report an Antideficiency Act violation if fiscal year 2006 funds are not available.

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6. Florida’s Monitoring of CSBG Funds Provided to Community Action Agencies Under the American Recovery and Reinvestment Act

The State agency has established adequate internal controls for assessing and monitoring the Community Services Block Grant (CSBG) funds provided to Community Action Agencies (CAA) under the Recovery Act. However, the OIG noted issues involving onsite monitoring and timely awarding of funds.

The State agency informed us that the late onsite monitoring occurred because it lost an employee and had to hire and train a replacement. Also, additional work was imposed as a result of the receipt of Recovery Act funds. State officials told the OIG that the State did not award funds to CAAs on time because it received the funds late.

As a result of these issues, risks are increased that intended recipients may not receive all of the additional CSBG services envisioned in the Recovery Act.

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7. Two Owners of Miami-Area Mental Health Care Corporation Plead Guilty to Orchestrating $200 Million Medicare Fraud Scheme

Two Miami-area residents and owners of a mental health care corporation, American Therapeutic Corporation (ATC), pleaded guilty today in U.S. District Court in Miami for orchestrating a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Departments of Justice and Health and Human Services (HHS) announced.

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8. Results of Limited Scope Review at Tri-County Community Council, Inc.

The OIG reviewed the financial condition of Tri-County Community Council, Inc. as part of a nationwide series of reviews of Community Action Agencies that have received funding under the American Recovery and Reimbursement Act of 2009.

Based on the OIG’s assessment, the Agency is financially viable, and its accounting system can segregate costs for various Federal programs. However, the Board has not provided the Agency with the oversight required by law and, instead, has granted the Executive Director autonomy in operating the agency. The OIG also noted weaknesses involving inadequate safeguarding of Federal funds, outdated or ineffective policies and procedures, a lack of documentation of inventory oversight, and an inability to fully expend funds. As a result, the risk for mismanagement of Federal funds has increased, and the Agency's capability to operate the CSBG program in accordance with Federal regulations may be impaired.

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9. Review of the United Planning Organization's Compliance with Health and Safety Regulations for Head Start Programs

As part of a series of reviews requested by the Administration for Children and Families, Office of Head Start, the OIG found that United Planning Organization (UPO) 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. In fiscal year (FY) 2009, Congress appropriated $7.1 billion to fund the Head Start program's regular operations. The American Recovery and Reinvestment Act of 2009 provided an additional $2.1 billion for the program during FYs 2009 and 2010.

As of August 2009, the files on 57 of UPO's 127 employees:

• Lacked a declaration form;

• Lacked evidence of a completed background check;

• Lacked evidence of a completed child protection register check;

• Contained evidence that employees had convictions for offenses that should have disqualified the individuals from employment in jobs working with children.

Files on all 127 employees were not maintained on the facilities' premises. In addition, UPO's driver did not meet all Federal driver-specific pre-employment and training requirements. UPO's 10 childcare facilities did not meet all Federal Head Start and State requirements on protecting children from unsafe materials and equipment. Finally, six of UPO's childcare facilities did not provide a fully secure environment for the children in their care. UPO's failure to consistently comply with requirements jeopardized the health and safety of children in its care.

The OIG recommends that UPO develop and consistently follow procedures to ensure that:

• All employee files contain evidence of checks of the child protection register and evidence of completed background checks, no applicants are hired if they have been convicted of an offense listed in District of Columbia regulations, and each facility maintains background check documentation on each employee;

• All drivers have met Federal driver-specific requirements;

• All unsafe materials and equipment are stored in locked areas out of the reach of children, all necessary repairs are addressed in a timely manner; all unsafe conditions are addressed, and all facilities meet State licensing requirements;

• All facilities are secure.

UPO concurred with most of the OIG’s findings and described actions that it had taken or planned to take to address the deficiencies that the OIG identified.

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10. Results of Limited Scope Review at Oakhurst Medical Centers, Inc.

The OIG reviewed the financial condition of Oakhurst Medical Centers, Inc. (Oakhurst), as part of a nationwide series of reviews of Community Health Centers that have received funding under the American Recovery and Reinvestment Act of 2009 (Recovery Act).

Oakhurst's financial viability improved over the time of the OIG’s audit period. It has the ability to manage and account for Federal funds and to operate a health center in accordance with Federal regulations. However, the OIG identified a weakness in Oakhurst's controls over its contracting process.

In determining whether Oakhurst is appropriately managing and accounting for the Recovery Act grant funding, the OIG recommended that HRSA consider the information presented in this report in assessing Oakhurst's ability to operate a Community Health Center in accordance with Federal regulations. In written comments on the OIG’s draft report, Oakhurst did not comment on the OIG’s finding regarding its improved financial viability and agreed with the OIG’s finding regarding insufficient controls over its contracting process.

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11. Part D Plans Generally Cover Drugs Commonly Used By Dual Eligibles

Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.

This report was mandated in the Patient Protection and Affordable Care Act of 2010.

Dual eligibles are individuals who are eligible for both Medicare and Medicaid. Overall, the OIG found that the rate of Part D plan formularies' inclusion of the 191 drugs commonly used by dual eligibles is high, with some variation. On average, Part D plan formularies include 96 percent of the 191 commonly used drugs. In fact, 90 percent of dual eligibles are enrolled in Part D plans that use formularies that include at least 90 percent of the commonly used drugs.

Dual eligibles are a particularly vulnerable population. Overall, they are in worse health than the average Medicare beneficiary and typically require and use more prescription drugs, and more health care services in general, than other Medicare beneficiaries.

To control costs and ensure the safe use of drugs, Part D plans are allowed to establish formularies from which they may omit drugs from prescription coverage and control drug utilization through utilization management tools. These tools include prior authorization, quantity limits, and step therapy. CMS annually reviews Part D plan formularies. CMS also assesses the utilization management tools present in each formulary.

The OIG found variation in the rate at which Part D plan formularies apply utilization management tools to the drugs commonly used by dual eligibles. Some Part D plan formularies apply these tools to none of the commonly used drugs, whereas others apply these tools to 45 percent of the commonly used drugs.

The OIG make no recommendations in this memorandum report. However, the OIG have provided CMS the list of 200 drugs commonly used by dual eligibles for its reference.

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12. Review of Title IV-E Foster Care Costs Claimed on Behalf of Delinquent Children in Los Angeles County, California

The OIG estimated that for fiscal years 2005 and 2006, the California Department of Social Services (the State agency) claimed unallowable Title IV-E costs totaling $5.7 million (Federal share) on behalf of delinquent Los Angeles County children, consisting of $2.2 million in maintenance payments and $3.5 million in associated administrative costs. Title IV-E of the Social Security Act authorizes Federal funds for States to provide foster care for children under an approved State plan. For children who meet foster care eligibility requirements, Federal funds are available to States for maintenance payments, administrative costs, and training costs.

Of the 100 monthly maintenance payments in the OIG’s sample, 80 payments were allowable, 18 payments were unallowable, and 2 payments could not be evaluated because the case files had been sealed under a court order. The 18 unallowable payments consisted of 13 payments and associated administrative costs for children who were not eligible for services and 5 payments for eligible children that included costs for unallowable services or for services that were not provided.

The OIG recommends that the State agency:

• Refund to the Federal Government $5.7 million for unallowable costs, consisting of $2.2 million in maintenance payments and $3.5 million in associated administrative costs;

• Ensure compliance with Federal requirements by periodically selecting a sample of foster care case files for delinquent children to determine whether the Los Angeles County Department of Children and Family Services made correct eligibility determinations and maintained sufficient documentation to support eligibility determinations and claimed payments only for eligible children, allowable services, and services provided.

The State agency did not concur with the OIG’s first recommendation or the amount of the recommended refund. The State agency concurred with the OIG’s second recommendation and provided information on actions that it had taken or planned to take to address the recommendation. After reviewing documentation that the State agency provided, the OIG revised the first recommendation accordingly.

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