Feeley & Driscoll's OIG Update: May 2012

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.

Please visit our Healthcare Accounting Group. This OIG Update is also accessible from the F&D website, by visiting www.fdcpa.com/oig.updates.htm.

Contents

1. Medicaid Rates for New York State-Operated Developmental Centers May Be Excessive
2. Review of Outpatient Brachytherapy Medicare Payments to Lakewood Ranch Medical Center
3. Michigan Did Not Perform Eligibility Redeterminations at Least Every 12 Months for Wayne County Medicaid Beneficiaries
4. Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by Wisconsin Physicians Service Insurance Corporation but Transitioned to Highmark Medicare Services in Jurisdiction 12 for the Period January 1, 2006, through June 30, 2009
5. Cardiovascular Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided
6. Musculoskeletal Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided
7. Medicare Compliance Review of Barnes Jewish Hospital for Calendar Years 2009 and 2010
8. Southern California Renal Disease Council, Inc., Claimed Unallowable and Unsupported Costs under Medicare Contract Number HHSM-500-2006-018C
   

1. Medicaid Rates for New York State-Operated Developmental Centers May Be Excessive

Based on the OIG's assessment of New York State's (the State) rate-setting methodology, the OIG determined that the payment rate for State-operated developmental centers might not have met the Federal requirement that payment for services be consistent with efficiency and economy. If the State had used actual costs in calculating the Medicaid daily rate, its reimbursement would have totaled $858 million ($429 million Federal share) in State fiscal year (SFY) 2009, a difference of $1.41 billion ($701 million Federal share). If the State had used prior year actual costs as the starting point for its rate-setting methodology, its SFY 2009 Medicaid daily rate would have been $1,500, or 63 percent less than the calculated reimbursement rate ($4,000).

State-operated developmental center payment rates are set using a complex methodology detailed in the State's Medicaid State plan. The rate is currently calculated by using a starting point that the State describes as "total reimbursable operating costs," which includes the prior year's total reimbursable operating costs, a volume variance adjustment, and a trend factor increase. Total reimbursable operating costs do not reflect the State's actual costs.

The OIG recommends that CMS work with the State to ensure that the State's Medicaid daily rate for State-operated developmental centers meets the Federal requirement that payment for services be consistent with efficiency and economy. Use of such a rate might have saved the Federal Medicaid program approximately $701 million in SFY 2009. In written comments on the OIG's draft report, the State agreed to work with CMS to ensure that the State's Medicaid daily rate for State-operated developmental centers meets the Federal requirement that payment for services be consistent with efficiency and economy. In separate comments, CMS concurred with the OIG's recommendation and stated that it was working with State officials to develop a revised payment methodology.

2. Review of Outpatient Brachytheraphy Medicare Payments to Lakewood Ranch Medical Center

Lakewood Ranch Medical Center (Lakewood) met applicable Medicare payment requirements for all 43 claims for catheter insertion, Iodine-125 seeds, and Technetium-99m sources. However, none of the 65 SIR-Sphere claims met applicable Medicare payment requirements, resulting in overpayments of $762,000. Lakewood improperly billed these claims because it did not have policies and procedures to account for partial vial usage or handling, tracking, or proper disposition of the unused portion of a vial, and it did not follow its procedures for ordering brachytherapy sources.

3. Michigan Did Not Perform Eligibility Redeterminations at Least Every 12 Months for Wayne County Medicaid Beneficiaries

The State Medicaid agency and its agent, the County Human Services agency, did not make eligibility redeterminations at least every 12 months for Medicaid beneficiaries who were continuously enrolled during the OIG's audit period.

From a random sample of 200 Medicaid beneficiaries, the State Medicaid agency performed eligibility redeterminations within the required 12-month period for 142 beneficiaries. However, the State Medicaid agency made payments to providers on behalf of 58 beneficiaries who were subject to annual redeterminations, but for whom the County Human Services agency did not perform eligibility redeterminations within the required 12-month period. Although the County Human Services agency had information for the cases that were due for redetermination, it did not complete all redeterminations pursuant to Federal and State requirements. For the period October 1, 2008, through September 30, 2010, the OIG estimates that the State Medicaid agency was reimbursed for Medicaid services provided to 79,277 beneficiaries whose eligibility redeterminations were not performed within the required 12-month period.

4. Review of Medicare Payments Exceeding Charges for Outpatient Services Processed by Wisconsin Physicians Service Insurance Corporation but Transitioned to Highmark Medicare Services in Jurisdiction 12 for the Period January 1, 2006, through June 30, 2009

The OIG's audit found that 205 of the 424 selected line items for which Wisconsin Physicians Service Insurance Corporation (WPS) made Medicare payments to providers for outpatient services during the period January 2006 through June 2009 were incorrect. The line items included items totaling $1.5 million, which the providers had not refunded by the beginning of the OIG's audit. Providers refunded overpayments on 18 line items totaling $32,000 before the OIG's fieldwork. The remaining 201 line items were correct. Effective February 2011, the claims that were originally processed by WPS in Jurisdiction 12 were transitioned to Highmark Medicare Services (Highmark). 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 205 incorrect line items included incorrect units of service, Healthcare Common Procedure Coding System (HCPCS) codes that did not reflect the procedures performed, unallowable services, a lack of supporting documentation, and a combination of incorrect units of service claimed and incorrect HCPCS codes.

The OIG recommends that Highmark:

• Recover the $1.5 million in identified overpayments;

• Work with CMS to implement system edits that identify line item payments that exceed billed charges by a prescribed amount;

• Use the results of this audit in its provider education activities.

Highmark will work with the Centers for Medicare & Medicaid Services to ensure the overpayments have been collected. In addition, Highmark described corrective actions that it had taken or planned to take.

5. Cardiovascular Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided

Cardiovascular global surgery fees often did not reflect the actual number of evaluation and management (E&M) services that physicians provided to beneficiaries during the global surgery periods. Using the OIG's sample results, the OIG estimates that Medicare paid a net $14.6 million for E&M services that were included in cardiovascular global surgery fees but not provided during the global surgery periods in 2007. Global surgery fees include payment for a surgical service and the related preoperative and postoperative E&M services provided during the global surgery period. The global period for major surgeries includes the day before the surgery, the day of the surgery, and the 90 days after the day of the surgery.

For 202 of the 300 sampled global surgeries, the fees did not reflect the actual number of E&M services provided. Specifically, physicians provided fewer E&M services than were included in 132 global surgery fees and provided more E&M services than were included in 70 global surgery fees. For the remaining 98 global surgeries that the OIG sampled, either the fees reflected the actual number of E&M services provided during the global surgery periods (19 surgeries) or the surgery was 1 of multiple surgeries (79 surgeries). (For the 79 sampled surgeries that were performed as 1 of multiple surgeries, the OIG was unable to determine whether the E&M services that physicians provided were related to the sampled surgeries or to 1 of the other surgeries performed on the same date of service. Therefore, the OIG did not categorize these 79 sampled surgeries as errors.)

The OIG recommends that CMS adjust the estimated number of E&M services within cardiovascular global surgery fees to reflect the actual number of E&M services being provided to beneficiaries, which would have reduced payments in CY 2007 alone by an estimated $14.6 million, or use the results of this audit during the annual update of the physician fee schedule. CMS concurred, in part, with the recommendations but planned to conduct further analysis before proposing any changes in the number of E&M services assigned to cardiovascular surgeries.

6. Musculoskeletal Global Surgery Fees Often Did Not Reflect the Number of Evaluation and Management Services Provided

Musculoskeletal global surgery fees often did not reflect the actual number of evaluation and management (E&M) services that physicians provided to beneficiaries during the global surgery periods. Using the OIG's sample results, the OIG estimates that Medicare paid a net $49 million for E&M services that were included in musculoskeletal global surgery fees but not provided during the global surgery periods in 2007. Global surgery fees include payment for a surgical service and the related preoperative and postoperative E&M services provided during the global surgery period. The global period for major surgeries includes the day before the surgery, the day of the surgery, and the 90 days after the day of the surgery.

For 211 of the 300 sampled global surgeries, the fees did not reflect the actual number of E&M services provided. Specifically, physicians provided fewer E&M services than were included in 165 global surgery fees and provided more E&M services than were included in 46 global surgery fees. For the remaining 89 global surgeries that the OIG sampled, either the fees reflected the actual number of E&M services provided during the global surgery periods (24 surgeries) or the surgery was 1 of multiple surgeries (65 surgeries). (For the 65 sampled surgeries that were performed as 1 of multiple surgeries, the OIG was unable to determine whether the E&M services that physicians provided were related to the sampled surgeries or to 1 of the other surgeries performed on the same date of service. Therefore, the OIG did not categorize these 65 sampled surgeries as errors.)

The OIG recommends that CMS adjust the estimated number of E&M services within musculoskeletal global surgery fees to reflect the actual number of E&M services being provided to beneficiaries, which would have reduced payments in 2007 alone by an estimated $49 million, or use the results of this audit during the annual update of the physician fee schedule. CMS concurred, in part, with the recommendations but planned to conduct further analysis before proposing any changes in the number of E&M services assigned to musculoskeletal surgeries.

7. Medicare Compliance Review of Barnes Jewish Hospital for Calendar Years 2009 and 2010

Barnes Jewish Hospital (the Hospital), located in St. Louis, Missouri, complied with Medicare billing requirements for 182 of the 240 outpatient and inpatient claims the OIG reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 58 claims, resulting in overpayments totaling $725,000 for calendar years 2008 through 2011. Overpayments occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims.

8. Southern California Renal Disease Council, Inc., Claimed Unallowable and Unsupported Costs under Medicare Contract Number HHSM-500-2006-018C

The OIG reviewed $5.45 million of the $6.68 million that Southern California Renal Disease Council, Inc. (the Council), claimed under contract number HHSM-500-2006-018C, which is a cost-reimbursable contract for the period July 1, 2006, through September 29, 2010.

Of the $5.45 million of costs that the OIG reviewed, $2.6 million was allowable under the terms of the contract and pursuant to applicable Federal regulations. The remaining $2.85 million consisted of $113,000 in other direct costs that the OIG determined were unallowable and $2.74 million that the OIG sets aside for CMS resolution. The Council claimed unallowable or unsupported costs because it did not have adequate controls to account for costs claimed under Federal contracts.

The OIG recommends that the Council:

• Refund to the Federal Government $113,000 for unallowable costs;

• Work with CMS to determine the allowability of $2.74 million that the OIG set aside and refund to the Federal Government any amount that is determined to be unallowable;

• Strengthen its controls to account for costs claimed under Federal contracts.

The Council concurred with the OIG's first and second recommendations and provided information on actions that it had taken or planned to take to address their third recommendation.

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