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Feeley & Driscoll's OIG Update: August 2011 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 additions from the OIG's website. This update is a monthly publication from the Healthcare Group at Feeley & Driscoll, P.C.
1. Review of the Massachusetts Executive Office of Health and Human Services Buy-In of Medicare Parts A and B for the Period July 2008 through December 2009 The State agency claimed Federal share for Medicare Part A and B premiums it paid on behalf of eligible Medicaid beneficiaries in accordance with Federal requirements. >Click here to view the full report 2. Review of Medicaid Payments for Services Provided Under New Jersey's Section 1915(c) Community Care Waiver by Elwyn New Jersey from January 1, 2005, through December 31, 2007 The OIG estimated that the State improperly claimed $903,000 in Federal Medicaid reimbursement for Community Care Waiver (CCW) program services provided by Elwyn New Jersey (Elwyn) that did not comply with certain Federal and State requirements during calendar years 2005 through 2007. The State’s CCW program allows the State to claim Medicaid reimbursement for home and community-based services provided to mentally retarded or developmentally disabled individuals who would otherwise require institutionalization in an Intermediate Care Facility for the Mentally Retarded (ICF/MR). The claims for unallowable services were made because (1) Elwyn and the State's Division of Developmental Disabilities (division) did not ensure that they only claimed for documented, allowable CCW program services, (2) the division did not ensure and document that all beneficiaries were assessed and certified to require an ICF/MR level of care, and (3) the division did not ensure that CCW program services were provided only to beneficiaries with completed and approved individual habilitation plans. The OIG recommends that the State:
The State generally agreed with the OIG’s recommendations. >Click here to view the full report 3. Audit of the Centers for Disease Control and Prevention's Shelf-Life Extension Program To ensure preparedness for war or other contingencies, the Department of Defense (DoD) maintains significant pre-positioned reserves of critical medical material. The Shelf Life Extension Program (SLEP) is a joint DoD and Food and Drug Administration (FDA) program. It was created to enable DoD to defer drug replacement costs by delaying the replacement of certain drugs that have useful lives beyond their expiration dates. The Centers for Disease Control and Prevention (CDC) maintains the Strategic National Stockpile (Stockpile), which contains significant amounts of pre-positioned drugs for use in responding to emergencies throughout the United States. CDC used the SLEP to extend the expiration dates of Stockpile drugs when possible. Of the 17 SLEP-eligible drug lots included in the OIG’s sample, FDA did not accept 9 lots for testing. CDC destroyed or returned these drug lots to the drug manufacturer for credit. FDA tested the remaining eight drug lots and extended their expiration dates. CDC had relabeled or was in the process of relabeling these eight drug lots at the conclusion of the OIG’s audit. This report contains no recommendations. >Click here to view the full report 4. Review of Massachusetts Title IV-E Adoption Assistance Costs for Federal Fiscal Years 2006 through 2008 In fiscal years (FY) 2006 through 2008, the Massachusetts Department of Children and Families (State agency) claimed $8.5 million ($4.2 million Federal share) in unallowable adoption assistance payments for 258 children whose eligibility the State agency could not support with adequate documentation. The State agency claimed the unallowable payments because it did not have adequate controls in place to ensure that it maintained proper documentation. The State agency informed us that it has put in place controls to ensure that it maintains the proper financial and judicial determination documentation. The State agency complied with the Federal requirements that the OIG reviewed in claiming adoption assistance payments for 1,242 of the 1,500 children selected for review. The OIG recommends that the State agency:
The State agency generally agreed with the OIG’s recommendations. >Click here to view the full report 5. Medicaid Brand-Name Drugs: Rising Prices Are Offset by Manufacturer Rebates Between 2005 and 2010, prices and payment amounts for Medicaid brand-name drugs increased at about three times the inflation rate. However, these significant increases were offset by savings generated by the Medicaid drug rebate program. According to a series of reports issued by AARP, wholesale acquisition costs (WAC) for the most widely used brand-name prescription drugs have risen significantly since 2002, substantially outpacing the inflation rate. Senator Bill Nelson expressed concern over AARP's findings and requested that OIG review drug pricing changes and their impact on Government health care programs, such as Medicaid. To address Senator Nelson's concerns, this study examined changes in WACs, average manufacturer prices (AMP), and Medicaid payment amounts for brand-name drugs between 2005 and 2010. OIG additionally examined the effect of rebates paid by drug manufacturers as part of the rebate program. Over the 5-year period under review, WACs, AMPs, and Medicaid payment amounts increased between 34 and 40 percent at the median while the inflation rate increased only 13 percent. In addition to outpacing overall inflation, increases in prices and payment amounts for brand-name drugs outpaced the inflation rate in each of the 5 years under review. However, the OIG found that when the per-unit payment amounts for Medicaid brand-name drugs were adjusted to account for the rebate amounts paid to States by manufacturers, the per-unit net cost to Medicaid increased at a much lower rate than other points of comparison between 2005 and 2009 (rebate data were not available for 2010). In fact, Medicaid's rebate-adjusted payment amounts for brand-name drugs actually declined at the median in 3 of 4 years, lagging behind the inflation rate. Taken as a whole, the results of the OIG’s study indicate that price increases for brand-name drugs may not necessarily translate to corresponding increases in Medicaid costs. Because of the savings generated by the rebate program, Medicaid's net costs for brand-name drugs actually increased at a lower rate than other points of comparison, including the inflation rate. CMS reiterated these points in its comments, expressing its belief that the rebate program has been effective in helping to offset increasing Medicaid drug costs. >Click here to view the full report 6. Medicaid Hospital Outlier Payment Follow-Up for Fiscal Years 2004 through 2006 The OIG’s review found that eight State agencies did not calculate Medicaid inpatient hospital cost outlier payments (Medicaid outlier payments) to effectively limit the payments to extraordinarily high-cost cases. The review is a follow-up to audits the OIG conducted in 2004 of these payments in eight State Medicaid agencies for fiscal years 1998 through 2003. During this period, Medicaid outlier payments increased substantially faster than Medicaid diagnosis-related group (DRG) base payments and Medicare outlier payments. The base payment within each DRG is fixed. To protect hospitals against large financial losses from extraordinarily high-cost cases, State agencies may supplement base payments with an additional payment, the Medicaid outlier payment. Medicaid outlier payments are calculated using formulas that vary by State. Because hospitals cannot identify actual costs for specific patients, the formulas apply cost-to-charge ratios to current charges to convert those charges to estimated costs. The eight State agencies calculated a hospital-specific cost-to-charge ratio based on actual costs and charges reported on each hospital's Medicaid cost report, but they used outdated cost-to-charge ratios and did not reconcile Medicaid outlier payments upon cost report settlement. The OIG recommends that CMS encourage all State agencies that make Medicaid outlier payments to:
CMS agreed with the OIG’s first and third recommendations and partially agreed with the second recommendation as it was phrased in the OIG’s draft report. After reviewing CMS's comments, the OIG revised their second recommendation. >Click here to view the full report 7. Review of Humana, Inc., Preferred Provider Organization Controls Over Durable Medical Equipment Suppliers in Florida Humana, Inc. (Humana), had established controls to ensure that durable medical equipment (DME) services were adequately supported and that beneficiaries received the DME paid for through its Preferred Provider Organization plans in Florida during calendar year 2009. >Click here to view the full report 8. Review of Select Medicaid Inpatient Psychiatric Hospital Service Requirements for One Illinois State-Owned Psychiatric Hospital during the Period January 1, 2000, through December 31, 2009 The OIG’s review found that the Illinois Department of Healthcare and Family Services (State agency) claimed $82.9 million in Federal matching funds for inpatient psychiatric service and disproportionate share hospital (DSH) payments made to Hospital A during the period January 1, 2000, through December 31, 2009, that were not in accordance with select Federal inpatient psychiatric hospital service requirements. The OIG have set aside $12.6 million in Federal matching funds for payments made to Hospital A for claims with dates of service during a period when some applicable regulations were inadvertently changed. During the audit period, Hospital A did not demonstrate compliance with the special Medicare Conditions of Participation (CoP) because the State agency did not believe that such demonstration was necessary. For periods during which a psychiatric hospital does not demonstrate compliance with the basic and special Medicare CoP, all inpatient psychiatric service and DSH payments received from the State agency are ineligible for Federal matching funds. The basic Medicare CoP address issues such as licensing, quality of care, safety, patient rights, self-assessment and performance improvement, and service availability. The special Medicare CoP specify staffing and medical record requirements. The OIG recommends that the State agency:
The State agency disagreed with the OIG’s recommendations. |
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