Feeley & Driscoll's OIG Update: February 2013

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. Massachusetts Medicaid Payments to Essex Park Rehabilitation and Nursing Center Did Not Always Comply with Federal and State Requirements
2. Massachusetts Medicaid Payments to Weymouth Health Care Center Did Not Always Comply with Federal and State Requirements
3. Nursing Facilities in Missouri Did Not Reconcile Invoice Records with Credit Balances and Report the Associated Medicaid Overpayments to the State Agency
4. Blue Cross Blue Shield of Tennessee Overclaimed Postretirement Benefit Costs for Fiscal Years 1992 through 2009
5. Indiana Improperly Claimed Federal Reimbursement for All Reviewed Medicaid Inpatient Psychiatric Hospital Service Payments to Logansport State Hospital
6. Acute Care Hospitals in Georgia Did Not Always Reconcile Invoice Records with Credit Balances and Report the Associated Medicaid Overpayments to the State Agency
7. Neighborhood Diabetes, Inc., Submitted Claims for Diabetic Testing Supplies without the KL Modifier in Accordance with Medicare Billing Requirements
8. The Republic of Namibia, Ministry of Health and Social Services, Did Not Always Manage the President's Emergency Plan for AIDS Relief Funds or Meet Program Goals in Accordance with Award Requirements
9. The Medicare Contractors' Payments in Jurisdiction 10 for Full Vials of Herceptin Were Often Incorrect
10. The Centers for Medicare & Medicaid Services Collected the Majority of Medicaid Overpayments but Millions Remain Uncollected
    

1. Massachusetts Medicaid Payments to Essex Park Rehabilitation and Nursing Center Did Not Always Comply with Federal and State Requirements

The Massachusetts Executive Office of Health and Human Services, Office of Medicaid (State agency), generally made Medicaid payments in accordance with Federal and State requirements to Essex Park Rehabilitation and Nursing Center (Essex Park). However, the State agency did not always adjust its Medicaid per diem payments to Essex Park by the amount of beneficiaries' cost-of-care contributions from resources such as Social Security and pensions. As a result, the State agency overstated its Federal claim by a total of approximately $28,000 ($16,000 Federal Share). The OIG attributed the incorrect Medicaid payments to clerical and billing errors.

2. Massachusetts Medicaid Payments to Weymouth Health Care Center Did Not Always Comply with Federal and State Requirements

The Massachusetts Executive Office of Health and Human Services, Office of Medicaid (State agency), generally made Medicaid payments in accordance with Federal and State requirements to Weymouth Health Care Center (Weymouth). However, the State agency did not always adjust its Medicaid per diem payments to Weymouth by the amount of beneficiaries' cost-of-care contributions from resources such as Social Security and pensions. As a result, the State agency overstated its Federal claim by a total of $88,000 ($48,000 Federal share). The OIG attributed the incorrect Medicaid payments to clerical and billing errors.

3. Nursing Facilities in Missouri Did Not Reconcile Invoice Records with Credit Balances and Report the Associated Medicaid Overpayments to the State Agency

Generally, nursing facilities in Missouri that the OIG sampled did not reconcile invoice records with credit balances and report associated Medicaid overpayments to the Missouri Department of Social Services (State agency). The Medicaid overpayments associated with invoice records totaled $33,000 ($21,000 Federal share). Based on these results, the OIG estimated that the State agency could realize an additional statewide recovery of $573,000 ($363,000 Federal share) from the OIG's audit period and obtain future savings if it enhanced its efforts to recover overpayments in provider accounts.

4. Blue Cross Blue Shield of Tennessee Overclaimed Postretirement Benefit Costs for Fiscal Years 1992 through 2009

Blue Cross Blue Shield of Tennessee (BCBS Tennessee), a Centers for Medicare & Medicaid Services (CMS) contractor, claimed unallowable PRB costs of approximately $334,000 on its final administrative cost proposals for fiscal years 1992 through 2009. BCBS Tennessee administered Medicare Part A operations under cost reimbursement contracts with CMS until the contractual relationship was terminated effective August 1, 2009.

5. Indiana Improperly Claimed Federal Reimbursement for All Reviewed Medicaid Inpatient Psychiatric Hospital Service Payments to Logansport State Hospital

The Indiana Office of Medicaid Policy and Planning (the State agency) claimed $5.8 million in Federal reimbursement for Medicaid inpatient psychiatric service payments made to Logansport State Hospital (Logansport) that were not in accordance with Federal requirements for inpatient psychiatric hospital services.

For States to claim Federal reimbursement for their Medicaid inpatient psychiatric service payments to a psychiatric hospital, the hospital's inpatient services must meet the Federal definitions of such services. These definitions require the provider to demonstrate compliance with the basic Medicare Conditions of Participation (CoP) generally applicable to all hospitals and two special Medicare CoP applicable to psychiatric hospitals.

Logansport did not demonstrate compliance with the special Medicare CoP at any time during the audit period. Therefore, all of the $5.8 million in Federal reimbursement for Medicaid inpatient psychiatric service payments made to Logansport for claims with dates of service during the audit period was not allowable. The State agency made these improper claims because it believed that Logansport had met all requirements to be eligible for Medicaid inpatient psychiatric service payments.

The OIG recommends that the State agency:

• Refund $5.8 million to the Federal Government;

• Identify and refund the Federal share of any additional payments made to Logansport for claims with dates of service after the audit period if neither the State agency nor Logansport can demonstrate Logansport's compliance with Federal requirements for inpatient psychiatric hospital services;

• Ensure that Federal reimbursement for Medicaid inpatient psychiatric service payments to psychiatric hospitals is claimed only if those hospitals can demonstrate compliance with the special Medicare CoP.

The State agency partially disagreed with the OIG's first recommendation and disagreed with their second and third recommendations.

6. Acute Care Hospitals in Georgia Did Not Always Reconcile Invoice Records with Credit Balances and Report the Associated Medicaid Overpayments to the State Agency

Seven of the eight acute care hospitals that the OIG sampled did not always reconcile invoice records with credit balances and report associated Medicaid overpayments to the State agency. Of the 123 invoice records with both Medicaid payments and credit balances in the OIG's sample, 67 contained no Medicaid overpayments; however, 56 contained Medicaid overpayments.

Credit balances may occur when a provider's reimbursement for services that it provides exceeds the allowable amount or when the reimbursement is for unallowable costs, resulting in an overpayment. Credit balances also may occur when a provider receives payments from Medicaid and another third-party payer for the same services.

The hospitals did not identify and report Medicaid overpayments because the State agency did not require providers to exercise reasonable diligence in reconciling invoice records with credit balances to determine whether overpayments existed. Also, the State agency did not provide adequate oversight to ensure that providers identified and reported Medicaid overpayments.

7. Neighborhood Diabetes, Inc., Submitted Claims for Diabetic Testing Supplies without the KL Modifier in Accordance with Medicare Billing Requirements

For calendar year 2010, Neighborhood Diabetes, Inc. (Neighborhood), submitted claims for diabetic testing supplies without the KL modifier in accordance with Medicare billing requirements. Medicare guidance requires suppliers to use the KL modifier on all claims for mail-order diabetic testing supplies, which are reimbursed at a lower amount than supplies provided at local supplier storefronts.

Of 100 sampled line items, 99 were properly submitted without the KL modifier because Neighborhood used company-owned vehicles to deliver diabetic testing supplies to Medicare beneficiaries. Under Medicare requirements in effect until CMS implements the revised definition of a mail order item, supplies delivered by company-owned vehicles are not considered mail-order items. Therefore, claims for these supplies do not require use of the KL modifier. The remaining sampled line item should have been submitted with the KL modifier because Neighborhood had delivered the diabetic testing supplies by mail. Neighborhood discovered this error during the OIG's audit and resubmitted the claim with the KL modifier. Consequently, this report has no recommendations.

8. The Republic of Namibia, Ministry of Health and Social Services, Did Not Always Manage the President's Emergency Plan for AIDS Relief Funds or Meet Program Goals in Accordance with Award Requirements

Through its Global HIV/AIDS Program, CDC implemented the President's Emergency Plan for AIDS Relief (PEPFAR), working with ministries of health and other in-country partners to combat HIV/AIDS by strengthening health systems and building sustainable HIV/AIDS programs in more than 75 countries. Through a 5-year cooperative agreement, CDC awarded PEPFAR funds totaling $20.6 million to the Republic of Namibia, Ministry of Health and Social Services (the Ministry) for the budget period September 30, 2009, through September 29, 2010.

The OIG's audit found that the Ministry did not always manage PEPFAR funds or meet program goals in accordance with award requirements. With respect to financial management, specifically financial transaction testing, the OIG found that $3.7 million of the $4 million reviewed was allowable, but $243,000 was not. Additionally, the Ministry used PEPFAR funds to pay $565,000 of potentially unallowable value-added taxes (VAT) on purchases, did not accurately report PEPFAR expenditures for this cooperative agreement on its financial status report (FSR) submitted to CDC, and did not obtain an annual financial audit as required by Federal regulations.

The OIG's program management review showed that 12 of the 30 accomplishments sampled from the annual progress report were not related to the goals and objectives of the cooperative agreement. Seven accomplishments were not supported by documentation and six were only partially supported. Also, the Ministry did not submit its annual progress report to CDC within the allotted time frame in accordance with Federal regulations.

The Ministry's policies and procedures did not ensure that it (1) maintained adequate supporting documentation for allowable expenditures under the cooperative agreement and accurately reported costs on its FSR, (2) submitted its progress report timely and included only items related to the agreement that it could fully support, and (3) obtained an annual financial audit and submitted the report as required by Federal regulations.

OIG must submit to Congress annual reports on the results of these evaluations, to include assessments of their scope and sufficiency. This report fulfills that responsibility for FY 2010.

The OIG recommends that the Ministry:

• Refund to CDC $243,000 of unallowable expenditures;

• Work with CDC to resolve whether the $565,000 of VAT was an allowable expenditure under the cooperative agreement;

• File an amended FSR for the budget period of the cooperative agreement that we reviewed;

• Develop and implement policies and procedures for reconciling the FSR to the accounting records prior to submission and ensuring that it maintains adequate supporting documentation for expenditures of Federal funds;

• Use the exchange rate in effect at the time it prepares the FSR;

• Develop and implement policies and procedures for creating an annual progress report that has goals and objectives related to the cooperative agreement and submitting the report in a timely manner;

• Have an annual audit performed and submit it in a timely manner to the applicable United States Agency.

The Ministry generally concurred with the OIG's recommendations, describing efforts it had taken, or plans to take, to address the OIG's recommendations.

9. The Medicare Contractors' Payments in Jurisdiction 10 for Full Vials of Herceptin Were Often Incorrect

Most Medicare payments that Medicare contractors made to providers in Jurisdiction 10 for full vials of Herceptin were incorrect. Herceptin (trastuzumab) is a Medicare-covered drug used to treat breast cancer that has spread to other parts of the body.

Of the 1,165 selected line items, 936 (80 percent) were incorrect and included overpayments totaling $1.2 million, or more than one-third of total dollars reviewed. These providers had not identified or refunded these overpayments by the beginning of the OIG's audit. Providers refunded overpayments on 57 line items totaling $90,000 before the OIG's fieldwork. For another 25 line items, the OIG could not review the line items or make a determination of overpayment because the provider was no longer in business. The remaining 147 line items were correct. In addition, during the course of the OIG's fieldwork, 7 providers identified 278 other line items totaling $322,000 in overpayments for the billing of full vials of Herceptin.

For the 936 incorrect line items that had not been refunded, providers reported incorrect units of service on 934 line items and did not provide supporting documentation for 2 line items. On each of the incorrect line items, the providers reported the units of service for the entire content of 1 or more vial(s), each containing 440 milligrams of Herceptin, rather than reporting the units of service for the amount actually administered. The providers attributed the incorrect payments to billing systems that did not detect incorrect units of service or a lack of education regarding multiuse-vial drugs. The Medicare contractors made these incorrect payments because neither the Fiscal Intermediary Standard System nor CMS's Common Working File had sufficient edits in place during the OIG's audit period to prevent or detect the overpayments.

The OIG recommends that Cahaba Government Benefit Administrators, LLC (Cahaba), the Medicare administrative contractor for Jurisdiction 10:

• Recover the $1.5 million in identified overpayments;

• Implement or update system edits that identify for review multiuse-vial drugs that are billed with units of service equivalent to the dosage of an entire vial(s);

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

Cahaba said that it had already taken steps to recover the identified overpayments.

10. The Centers for Medicare & Medicaid Services Collected the Majority of Medicaid Overpayments but Millions Remain Uncollected

The OIG's objective was to determine whether CMS had collected sustained Medicaid overpayments identified in selected OIG audit reports. As of December 2012, CMS reported collecting $987.5 million of the $1.2 billion in Medicaid overpayments that it had sustained in the 147 audit reports covered by the OIG's review. However, CMS had not collected the remaining $225.6 million. The uncollected amount related to overpayments that OIG had identified in 10 audit reports that the States had not agreed to refund. In addition, CMS could not document that $7.2 million that it reported as collected had been collected.

CMS had not collected the $225.6 million in overpayments because it had not always proceeded with the collection process in a timely manner. Also, CMS could not document that $7.2 million it reported as collected had been collected because it did not maintain adequate supporting documentation. Additionally, CMS did not ensure that the States reported Medicaid overpayments on the correct lines of the Form CMS-64 to facilitate CMS tracking of recoveries.

The OIG recommends that CMS:

• Collect the remaining $225.6 million that is due the Federal Government;

• Review and address delays in resolving OIG audit recommendations and promptly pursue corrective actions;

• Maintain adequate documentation to support the collection of overpayments in accordance with OMB Circular A-50 and CMS Standard Operating Procedures;

• Educate the States about their responsibility to report overpayments on the correct line of the CMS-64 to improve oversight of the reporting process.

CMS concurred with the OIG's second, third, and fourth recommendations and provided information on actions that it had taken or planned to take to address them. CMS partially concurred with the OIG's first recommendation.

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