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Feeley & Driscoll's OIG Update: October 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. Contents
1. Review of Medicaid Hospice Payments at Evercare Hospice & Palliative Care for State Fiscal Years 2007 through 2009 The Massachusetts Executive Office of Health and Human Services, Office of Medicaid (State agency), did not always make Medicaid payments to Evercare Hospice & Palliative Care (Evercare) in accordance with Federal and State requirements. Based on the OIG’s sample results, the OIG estimated that the State agency incorrectly reimbursed Evercare $1.3 million ($669,000 Federal share) for the period July 1, 2006, through June 30, 2009. >Click here to view the full report 2. Health Resources and Services Administration’s Bureau of Primary Health Care Facility Investment Program Grants- Internal Control Review of the Process for Monitoring American Recovery and Reinvestment Act Funds The OIG’s review found that the Health Resources and Services Administration's (HRSA) Bureau of Primary Health Care internal controls over the process for monitoring American Recovery and Reinvestment Act of 2009 funds to Facility Investment Program grantees, as described by HRSA management, are suitably designed to provide reasonable assurance that the specified control objectives would be achieved if the described controls were complied with satisfactorily and applied as designed. >Click here to view the full report 3. Review of Costs Claimed for Selected High-Dollar Outpatient Services in the Colorado Medicaid Program during the Period January 1, 2007, through December 31, 2009 The Colorado Department of Health Care Policy and Financing (the State agency) did not always claim costs for selected high-dollar outpatient service claims during calendar years 2007 through 2009 pursuant to Federal and State requirements. The OIG referred to outpatient services whose claims included at least one line item paid amount greater than $10,000 as "high-dollar outpatient service claims." Of the 278 high-dollar outpatient service claims that the State agency claimed for payments it made to providers during the audit period, 239 were allowable. For the remaining 39 high-dollar outpatient service claims, providers reported incorrect charges and could not provide documentation to support that some of the outpatient services were provided. This resulted in overpayments totaling $273,000 ($149,000 Federal share). >Click here to view the full report 4. Review of Select Medicare Payments Exceeding Charges for Outpatient Services Processed by National Government Services in Jurisdiction 13 for the Period January 1, 2006, through June 30, 2009 The OIG’s audit found that 1,311 of the 1,841 selected line items for which National Government Services (NGS) made Medicare payments to providers for outpatient services for the period January 2006 through June 2009 were incorrect and included overpayments totaling $7.7 million. The remaining 530 line items were correct. Medicare uses an outpatient prospective payment system to pay certain outpatient providers. In this method of reimbursement, the Medicare payment is not based on the amount that the provider charges. Billed charges generally exceed the amount that Medicare pays the provider. Therefore, a Medicare payment that significantly exceeds the billed charges is likely to be an overpayment. The deficiencies in the 1,311 incorrect line items included (1) incorrect units of service, (2) Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedures performed, (3) a combination of incorrect units of service and incorrect HCPCS codes, (4) services not supported by documentation, and (5) services with an incorrect payment rate. The OIG recommends that NGS:
NGS generally agreed with the OIG’s recommendations. >Click here to view the full report 5. Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by Palmetto GBA, LLC, in Jurisdiction 11 for the Period January 1, 2006 through June 30, 2009 The OIG’s audit found that 746 of the 1,592 selected line items for which Palmetto GBA, LLC (Palmetto), made Medicare payments to providers for outpatient services for the period January 2006 through June 2009 were incorrect. The line items included overpayments totaling $4.7 million, which the providers had not refunded by the beginning of the OIG’s audit. Providers refunded overpayments on 680 line items totaling $2.4 million before the OIG’s fieldwork. The remaining 166 line items were correct. Medicare uses an outpatient prospective payment system to pay certain outpatient providers. In this method of reimbursement, the Medicare payment is not based on the amount that the provider charges. Billed charges generally exceed the amount that Medicare pays the provider. Therefore, a Medicare payment that significantly exceeds the billed charges is likely to be an overpayment. The deficiencies in the 746 incorrect line items included (1) incorrect units of service, (2) lack of supporting documentation, (3) a combination of incorrect units of service and incorrect Healthcare Common Procedure Coding System (HCPCS) codes, (4) billing for the unlabeled use of a drug/biological, (5) billing for unallowable services, (6) billing separately for services for which payment was packaged in the payment for the primary service, (7) incorrect HCPCS codes, and (8) incorrectly calculating a line item payment. The OIG recommends that Palmetto:
Palmetto generally concurred with the OIG’s findings and recommendations and described corrective actions that it had taken or planned to take. >Click here to view the full report 6. Review of Medicaid Claims Submitted by Continuing Day Treatment Providers in New York State The New York State Department of Health (DOH) did not claim Federal Medicaid reimbursement for continuing day treatment (CDT) services provided by nonhospital providers in the State in accordance with State requirements. Based on the OIG’s sample results, the OIG estimates that DOH improperly claimed $84.4 million in Federal Medicaid reimbursement during the OIG’s January 1, 2005, through December 31, 2008, audit period. Of the 100 claims in the OIG’s random sample, all claims complied with Federal requirements and 43 claims complied with Federal and State requirements, but 57 claims did not comply with State requirements. Of the 57 noncompliant claims, 10 contained more than 1 deficiency. The CDT program provides active treatment to Medicaid recipients designed to maintain or enhance current levels of functioning and skills, to maintain community living, and to develop self-awareness and self-esteem through the exploration and development of strengths and interests. The OIG recommends that DOH:
DOH disagreed with the OIG’s first recommendation and did not indicate concurrence or nonconcurrence with the OIG’s remaining recommendations. >Click here to view the full report 7. Review of Medicare Payments Exceeding Charges by $500 to $1,000 for Outpatient Services Processed by Palmetto GBA, LLC, in Jurisdiction 11 for the Period January 1, 2006, through June 30, 2009 The OIG’s audit found that 619 of the 1,048 selected line items for which Palmetto GBA, LLC, made Medicare payments to providers for outpatient services for the period January 1, 2006, through June 30, 2009, were incorrect. The line items included overpayments totaling approximately $744,000 that the providers had not refunded by the beginning of the OIG’s audit. Providers refunded overpayments on 91 line items totaling approximately $85,000 before the OIG’s fieldwork. The remaining 338 line items were correct. >Click here to view the full report 8. Review of Prescribed Drug Costs in the Colorado Medicaid Family Planning Program The Colorado Department of Health Care Policy and Financing (the State agency) did not always claim family planning prescribed drug costs during fiscal years 2006 through 2009 pursuant to Federal and State requirements. Of the 100 claims in the OIG’s sample, 73 qualified as family planning services and were allowable for Federal reimbursement at the enhanced 90-percent rate (90-percent rate). The 27 remaining claims in the OIG’s sample totaling $1,100 (Federal share) contained errors. Specifically, 26 of the claims were not allowable for Federal reimbursement at the 90-percent rate (but were allowable for Federal reimbursement at lower Federal medical assistance percentage rates) because the contraceptive drugs in question were not prescribed for family planning purposes. The other claim was not allowable for any Federal reimbursement pursuant to Federal and State requirements because it lacked supporting documentation. Based on the results of the OIG’s sample, the OIG estimated that the State agency received $618,000 in unallowable Federal reimbursement. >Click here to view the full report 9. Review of Drug Costs to Medicaid Pharmacies and Their Relation to Benchmark Prices States historically have based reimbursement for the costs to acquire Medicaid prescription drug ingredients on the average wholesale price (AWP). States generally use reimbursement methodologies based either solely on the AWP or the AWP in combination with another benchmark price, such as the wholesale acquisition cost (WAC). For multiple-source drugs that meet certain criteria, reimbursement is limited, in the aggregate, to Federal upper limit (FUL) amounts established by CMS. As part of the Medicaid drug rebate program, manufacturers report the average manufacturer price (AMP) of drug ingredients based on actual sales transactions. A primary publisher of AWPs announced that it would discontinue publishing them by September 26, 2011. The OIG performed this review to provide information that States can use as they consider changes to their reimbursement methodologies. The OIG’s review found that the AWP, WAC, and AMP had consistent relationships with invoice prices for single-source drugs, but none of the benchmarks had consistent relationships with invoice prices for multiple-source drugs without FULs. Although it was based on actual sales transactions, the AMP was the least consistent benchmark. States may be able to better approximate the invoice prices of drugs by developing different reimbursement methodologies for single-source drugs, brand-name multiple-source drugs, and generic multiple-source drugs. The OIG recommends that CMS share the results of this review with States to use when considering changes to their pharmacy reimbursement methodologies, including those for single-source drugs, brand-name multiple-source drugs, and generic multiple-source drugs. CMS officials said that they appreciated the information the OIG provided. >Click here to view the full report 10. Multi-State Review of Centers for Medicare & Medicaid Services Medicaid Drug Expenditure Controls The OIG reviewed 14 selected State agencies' claims for reimbursement of Medicaid outpatient prescription drug expenditures. Of the approximately $41.6 billion in drug expenditures claimed by the 14 State agencies, unallowable and potentially unallowable drug expenditures totaled $258.8 million ($166.6 million Federal share): $68.7 million (Federal share) for drug products not listed on the quarterly drug tapes, $58.1 million (Federal share) for terminated drugs, $429,000 (Federal share) for less-than-effective drugs, and $39.3 million (Federal share) for inadequately supported drug expenditures. For the remaining approximately $41.3 billion (approximately $23.4 billion Federal share), the OIG identified no other drugs that were not included on the quarterly drug tapes or were terminated, less than effective, or inadequately supported. Neither CMS nor the 14 State agencies had adequate controls to ensure that all drug expenditures complied with Federal requirements. The 14 State agencies generally did not use the quarterly drug tapes to determine whether a drug was eligible for coverage and did not contact CMS to determine whether a drug was eligible for coverage if the drug was not listed on the quarterly drug tapes. These shortcomings in internal controls adversely affected the efficiency of the Medicaid outpatient prescription drug program. The OIG’s audits of the 14 State agencies identified potential cost savings to the Medicaid program that can be realized through the implementation of the OIG’s recommendations. The OIG recommends that CMS:
CMS concurred with the OIG’s third recommendation, did not concur with the second recommendation, and partially concurred with the OIG’s other recommendations. >Click here to view the full report 11. Appropriations Funding for National Institute of Diabetes and Digestive and Kidney Diseases Contract HHSN267-2007-00014C with the University of South Florida The OIG’s review found that during fiscal years 2007 through 2009, NIH's National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) did not comply with the time requirements and may not have complied with the amount requirements specified in appropriations statutes in administering contract HHSN267-2007-00014C (the Contract) with the University of South Florida. 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. |
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