In a recent report, the OIG concluded that Medicare would have saved millions of dollars in 2011 if Medicare Part B prescription drug dispensing and supplying fees had been aligned with the rates paid by Medicare Part D plans or state Medicaid programs. Specifically, if Part B dispensing and supplying fees had been the same as average Part D rates in 2011, Part B would have saved $110.9 million, while use of average state Medicaid rates would have saved $106.3 million. The OIG recommended that CMS issue regulations to decrease Part B dispensing and supplying fees to rates similar to those of other payers, such as Part D and Medicaid. CMS did not concur with the OIG’s recommendation, and requested that the OIG study actual costs associated with dispensing these Part B drugs. For additionl information, see the full report, “Medicare Part B Prescription Drug Dispensing and Supplying Fee Payment Rates Are Considerably Higher than the Rates Paid by Other Government Programs."
The OIG continues to fault CMS for failing to issue final regulations – authorized by the Balanced Budget Act of 1997 (BBA) – to enforce the location requirements for rural health clinics (RHCs). By way of background, facilities can be designated as RHCs and qualify for enhanced Medicare and Medicaid reimbursement if they are: (1) located in rural areas and (2) located in areas that have a shortage of health care providers. The BBA allows CMS to terminate of RHCs that no longer met the location requirements as long as they are not determined to be "essential provider" RHCs, but CMS has not issued regulations to allow RHCs to apply as essential provider RHCs. The OIG determined that about 12% of RHCs no longer met the location requirements in 2013 (a 56% increase since 2003, when the OIG last examined this issue). The Medicare program and its beneficiaries paid approximately $132 million to these RHCs in 2012. The OIG points out that these providers they should continue to qualify as RHCs only if they are determined to be essential providers. In order to ensure that CMS can enforce the BBA provisions relating to RHCs, the OIG recommends that CMS issue regulations to enable RHCs determined to be essential providers to remain certified as RHCs. CMS thanked OIG for “their efforts on this issue,” but declined to commit to issuing regulations.
The OIG has issued a report evaluating state standards for access to care for Medicaid managed care program enrollees, an issue which the OIG notes has taken on heightened importance as enrollment in such programs grows. Based on a review of the 33 states with comprehensive, "full risk" Medicaid managed care, the OIG concluded that state standards for access to care vary widely. For example, state standards for primary care providers range from one primary care provider for every 100 enrollees to one provider for every 2,500 enrollees. The OIG also pointed out varying state strategies to assess compliance with access standards, and noted that most states did not identify any violations of such standards over a five-year period. The OIG recommend that CMS: (1) strengthen its oversight of state standards, including ensuring that states develop standards for key provider types; (2) strengthen its oversight of states' methods to assess access standard compliance; (3) improve states' efforts to identify and address violations of access standards; and (4) provide technical assistance to states. CMS concurred with the recommendations.
The OIG has created a “Spotlight” page on its internet site focusing on “Medicaid: State Policies that Result in Inflated Federal Costs.” The page compiles OIG reports that highlighted “State policies that distort the cost-sharing arrangement, causing the Federal Government to pay more than its share of Medicaid expenditures.” According to the OIG, such mechanisms do not increase benefits to beneficiaries, but they increase states' funds at the expense of the federal government. The OIG discusses steps that have been taken to close loopholes in this area, but it notes that more work remains. The OIG continues to recommend that CMS seek legislation to strengthen its ability to curb wasteful federal spending stemming from states claiming reimbursement for excessive payments.
The OIG has issued a report reviewing the extent to which Medicare- and Medicaid-certified nursing facilities comply with federal requirements related to reporting allegations of resident abuse or neglect. For the purposes of this report, the OIG uses the term “nursing facility” (NF) to refer to both Medicare skilled nursing facilities and Medicaid nursing facilities. Based on a sample of 250 NFs, the OIG estimates that:
- 85% of NFs reported at least one allegation of abuse or neglect to OIG in 2012. The OIG notes that for the purposes of this study, it did not determine whether the reported allegations were substantiated.
- 76% of NFs maintained policies that address federal regulations for reporting both allegations of abuse or neglect and investigation results.
- 61% of NFs had documentation supporting the facilities’ compliance with regulations under Section 1150B of the Social Security Act requiring NFs to (1) annually notify covered individuals (i.e., owners, operators, employees, managers, agents, or contractors of nursing facilities) of their obligation to report to the appropriate entities any reasonable suspicion of a crime, and (2) clearly post a notice specifying employees’ rights to file a complaint under Section 1150B.
- 53% of allegations of abuse or neglect and the subsequent investigation results were reported, as required.
The OIG recommends that CMS ensure that nursing facilities: (1) maintain policies related to reporting allegations of abuse or neglect; (2) notify covered individuals of their obligation to report reasonable suspicions of crimes; and (3) report allegations of abuse or neglect and investigation results in a timely manner and to the appropriate individuals.
A recent OIG report, “Medicaid Drug Rebate Dispute Resolution Could Be Improved,” focuses on the extent to which drug manufacturers and states disagree on the amount of money that manufacturers owe states in Medicaid rebates, and how such disputes are resolved. Most states providing data (29 of 31) estimated that only a small percentage of rebate dollars were disputed, such as when poor quality claims data leads to disputes regarding unit of measure conversions, physician-administered drugs, and ineligible drugs (e.g., drugs purchased under the 340B Drug Pricing Program and terminated drugs). States reported difficulties in providing data to resolve such disputes, and some state and manufacturer representatives expressed interest in greater CMS involvement in preventing and resolving disputes. To that end, the OIG recommends that CMS: work with states to improve the quality of claims data submitted by providers and pharmacies; help states obtain better data on ineligible drugs; facilitate states’ submission of standardized claims data, and establish a stronger role in dispute resolution.
The OIG has issued two reports on implementation of the ACA health insurance “Marketplaces.” The first report, “Marketplaces Faced Early Challenges Resolving Inconsistencies with Applicant Data,” looked at the extent to which the federal and state health insurance marketplaces ensured the accuracy of information submitted by insurance applicants, including information related to eligibility for premium tax credits and cost sharing reductions. According to the OIG, marketplaces were unable to resolve most data inconsistencies, particularly involving citizenship and income information (although the OIG cautions that inconsistencies do not necessarily indicate that incorrect information was provided or that financial assistance is inappropriate). The report recommends additional planning and oversight to resolve inconsistencies.
A related OIG report questions the effectiveness of internal controls implemented by the federal, California, and Connecticut marketplaces in ensuring that individuals were enrolled in qualified health plans (QHPs) according to federal requirements. In particular, the OIG identified deficiencies in internal controls that could limit the marketplaces’ ability to prevent the use of inaccurate or fraudulent information when determining applicant’s eligibility for enrollment in a QHP. The OIG recommended steps to verify applicant data, determine enrollment and cost sharing assistance eligibility, and maintain and update enrollment data.
Finally, the GAO released a report that concentrates on contractor performance related to the Healthcare.gov portal. The GAO points cost increases and delayed system functionality for the federally facilitated marketplace that resulted from CMS’s lack of effective planning, changing requirements and oversight gaps. GAO recommends that CMS take immediate steps to address contract costs, acquisition strategies, and use of oversight tools. In its response to the report, CMS discussed improvements it was making in the management of the Marketplace (including a stronger CMS management structure, an improved structure of Marketplace contracts, and a strengthened acquisition workforce). CMS expressed confidence that “its contractors will deliver the needed capabilities for the 2015 open enrollment period in a timely and cost-efficient manner.”
The OIG has posted guidance on its contractor self-disclosure program, which provides a means for contractors to self-disclose potential violations of the False Claims Act and federal criminal laws involving fraud, conflict of interest, bribery, or gratuity. The Federal Acquisition Regulation (FAR) requires federal contractors with contracts valued over $5 million to disclose to the OIG when they have credible evidence of one of these violations. The guidance specifies that such self-disclosures are made with no advance agreement regarding possible OIG resolution and with no promises regarding potential Department of Justice action. The guidance, a disclosure form, and FAQs are available at the OIG web site.
The OIG attributes $32 million in Medicare Part D spending on HIV drugs in 2012 to claims associated with “questionable utilization patterns.” Specifically, nearly 1,600 Part D beneficiaries with HIV drug claims had no indication of HIV in their Medicare histories, received an excessive dose or supply of HIV drugs, received HIV drugs from a high number of pharmacies or prescribers, or received contraindicated drugs. The OIG observes that while some of this utilization may be legitimate, these patterns warrant further scrutiny, since they could indicate that a beneficiary is receiving inappropriate drugs or diverting drugs, a pharmacy is billing for drugs that the beneficiary did not receive, or a beneficiary’s identification number was stolen. The OIG recommend that CMS: expand sponsors’ drug utilization review programs and use of beneficiary-specific controls; expand the Overutilization Monitoring System to additional drugs; restrict certain beneficiaries to a limited number of pharmacies or prescribers and limit their ability to switch plans; increase monitoring of beneficiaries’ utilization patterns; and follow up on questionable utilization patterns.
According to an OIG report, “Questionable Billing for Medicare Part B Clinical Laboratory Services,” Medicare allowed $1.7 billion for clinical laboratory claims in 2010 associated with eight types of “questionable billing.” Such indicators of questionable billing identified by the OIG include: claims for beneficiaries with no associated Part B service with ordering physician; claims with beneficiaries living more than 150 miles from the ordering physician; duplicate lab tests; claims with ineligible or invalid ordering-physician numbers; claims with compromised beneficiary, ordering-physician, or lab provider number. More than 1,000 labs had unusually high billing for five or more measures of questionable billing for Medicare lab service, and almost half of these labs were located in California and Florida. The OIG notes that while “some of this billing may be legitimate, all labs that exceeded thresholds on five or more measures of questionable billing may warrant further scrutiny.” The OIG recommends that CMS: review the labs identified as having questionable billing and take appropriate action; review the effectiveness of existing program integrity strategies; and ensure that existing edits prevent claims with invalid and ineligible ordering-physician numbers from being paid. CMS concurred with these recommendations.
The OIG has issued a report entitled “Limitations in Manufacturer Reporting of Average Sales Price Data for Part B Drugs.” The OIG determined that at least one-third of 200 manufacturers did not submit required ASPs for some of their products in the third quarter of 2012, despite being required to do so, and another 45 manufacturers were not required to report ASPs because they have not signed a Medicaid drug rebate agreement (although 22 of these manufacturers voluntarily reported ASPs). In addition, the OIG asserts that inaccuracies in CMS’s ASP files may have affected Medicare payments for a small number of drugs. The OIG made a series of recommendations, including that CMS continue to work with OIG to identify and penalize manufacturers that do not meet ASP reporting requirements (CMS concurred). CMS did not agree with an OIG recommendation to seek a legislative change to directly require all manufacturers of Part B drugs to submit ASPs.
Today the HHS OIG issued a Special Fraud Alert highlighting its concerns regarding two trends involving transfers of value from laboratories to physicians that the OIG believes “present a substantial risk of fraud and abuse under the anti-kickback statute.” Specifically, the OIG details risks involved with certain compensation paid by laboratories to referring physicians and physician group practices for (1) blood specimen collection, processing, and packaging, and (2) submitting patient data to a registry or database. The Special Fraud Alert reiterates the OIG’s “longstanding concerns” when payments from laboratories to physicians exceed the fair market value of the physicians’ services or reflect the volume or value of referrals of federal health care program business. Reed Smith is preparing an analysis of the Alert.
The OIG issued a report today entitled “Inconsistencies in States’ Reporting of the Federal Share of Medicaid Drug Rebates.” States are eligible for higher federal financial participation (FFP) rates for certain Medical Assistance services, such as those related to family planning, Indian Health Services, and breast and cervical cancer care. Based on prior work, the OIG was concerned that states may not always use the higher FFP rates when refunding to the federal government its share of drug rebates that drug manufacturers paid to the states, which could result in a loss of federal share. The new OIG report assesses whether states reported drug rebates at the applicable FFP rates for the period July 1, 2011 through June 30, 2012. According to the OIG, while states claimed drug expenditures at higher FFP rates, they did not consistently report the federal share of drug rebates at those higher FFP rates for one or more quarters during the review period. The OIG also found that states used different methodologies to determine the federal share of drug rebates, which could be attributed to a lack of specific national CMS guidance instructing states to report drug rebates at the FFP rates at which drugs were originally reimbursed or that identifies acceptable methods to determine the federal share of drug rebates. The OIG recommended that CMS issue guidance that clearly instructs states to report drug rebates at the applicable FFP rates and identify acceptable methods to determine the federal share of drug rebates; CMS concurred.
OIG Reports Assess Impact of Mail-Order Competitive Bidding on Diabetes Test Strips Market Concentration
The OIG has issued two reports on Medicare market share of mail-order diabetes test strips – one examining the market share before the start of Medicare mail-order competitive bidding in July 1, 2013 and a second report examining the three-month period after competitive bidding went into effect. By way of background, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) prohibited CMS from awarding competitive bidding program contracts for mail order diabetes test strips to suppliers that do not demonstrate that their bid covers at least 50%, by volume, of all types of mail order diabetes test strips. MIPPA also requires the OIG to complete a study to determine market shares of diabetes test strips in the competitive bidding program.Continue Reading...
The OIG has released an ACA-mandated report assessing the extent to which formularies used by Medicare Part D drug plans include drugs commonly used by full-benefit dual-eligible individuals(i.e., individuals eligible for both Medicare and Medicaid and who receive full Medicaid benefits and assistance with Medicare premiums and cost-sharing). The report, which covered the 3,309 Part D plans operating in 2014, determined that on average, Part D plan formularies include 96% of the 195 commonly-used drugs identified by the OIG. In addition, 64% of the commonly-used drugs are included by all Part D plan formularies. The OIG observes that these results are largely unchanged from the 2013 report. Formularies applied utilization management tools to 28% of the unique drugs reviewed in 2014, also the same as in 2013.
The OIG has issued a report entitled “Vulnerabilities in Medicare’s Interrupted-Stay Policy for Long-Term Care Hospitals.” By way of background, the Medicare long-term care hospital (LTCH) interrupted-stay policy generally treats time spent at an LTCH before and after an interruption as a single stay, rather than considering the second portion of the LTCH stay to be a readmission with a separate payment. However, LTCHs receive payment for a second stay if a beneficiary returns home, receives services from multiple facilities before returning to the LTCH, or is discharged to an inpatient prospective payment system (IPPS) hospital, inpatient rehabilitation facility (IRF), or skilled nursing facility (SNF) and then readmitted to the LTCH after the applicable “fixed-day threshold” – a specified number of days that varies by the type of intervening facility. The OIG identified several vulnerabilities in the LTCH interrupted-stay policy, including inappropriate payments, financial incentives to delay readmissions, and potential overpayments to co-located LTCHs. The OIG estimates that in 2010 and 2011, Medicare inappropriately paid $4.3 million to LTCHs and “intervening facilities” (facilities that treated the patients during the interruptions in the LTCH stay) for interrupted stays, and potentially millions of dollars more for inappropriate readmissions. The OIG points out that the readmissions may be appropriate, but the OIG raises concerns regarding “whether financial incentives, rather than beneficiaries’ medical conditions, may have influenced some LTCHs’ readmission decisions.” The OIG recommends a series of steps to address identified vulnerabilities, including CMS analyses, enforcement, and recoupment of identified overpayments. Previously, in the May 15, 2014 proposed Medicare IPPS/LTCH PPS update for FY 2015, CMS proposed to expand the interrupted stay policy by adopting the same 30-day standard as the fixed-day threshold for a discharge to and readmission from an IPPS hospital, IRF or SNF.
In a recent report, “Average Manufacturer Price Determinations by Selected Drug Manufacturers Generally Were Consistent With Federal Requirements,” the OIG has determined that the methodologies used by 20 selected (unnamed) drug manufacturers to determine average manufacturer price (AMP) for drugs reimbursed by Medicaid generally were consistent with federal requirements. In particular, the manufacturers consistently included transactions from retail community pharmacies rather than the more broadly-defined retail pharmacy class of trade. The OIG did note that manufacturers treated authorized generic sales to a secondary manufacturer differently, and suggested that CMS clarify this policy. The OIG also recommended that CMS permit a presumptive-inclusion methodology for wholesaler sales, since manufacturers would not have been able to calculate the AMP for a number of drugs without this methodology. Finally, the OIG recommended that CMS expand the use of a 12-month rolling average to estimate and remove indirect sales related to ineligible customers (in addition to using this for average for manufacturer price concessions).
On May 21, 2014, the OIG issued its “Supplemental Special Advisory Bulletin: Independent Charity Patient Assistance Programs” (SSAB) to address recently observed risks stemming from the conduct of Independent Charity Patient Assistance Programs (PAPs). The SSAB, which expands on previous OIG guidance from 2002 and 2005, specifically focuses on PAPs’ definitions of disease funds and the identification of eligible recipients, as well as the conduct of donors with relation to Independent Charity PAPs. A Reed Smith Client Alert analyzing the bulletin is available here.
The OIG has issued a report, requested by Congress, that identifies state background check requirements for home health agencies (HHAs) and describes the types of criminal convictions that disqualify individuals for employment by HHAs under such state policies. OIG observes that the data might be useful to CMS as it administers the Nationwide Background Check Program, and it may help states that are considering establishing or enhancing background check requirements for HHA employees. A second OIG report in the works will determine the extent to which HHAs employed individuals with criminal convictions as of January 1, 2014 and identify the procedures that HHAs use to perform background checks on prospective and/or current employees.
The OIG has issued its spring Semiannual Report to Congress, which summarizes major OIG activities during the period of October 2013 through March 2014. The OIG highlights “ramped up” oversight of Affordable Care Act implementation efforts, particularly with regard to eligibility systems, payment accuracy, contractor oversight, and data security associated with the Health Insurance Marketplaces. Other core areas for the OIG during this time included ensuring the appropriate use of prescription drugs by Medicare and Medicaid beneficiaries, CMS oversight of Medicare contractors, and grants oversight and management. With regard to enforcement activities during the first half of FY 2014, the OIG reported 465 criminal actions against individuals or entities that engaged in crimes against HHS programs, along with 266 civil actions (including false claims and unjust-enrichment lawsuits, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters), and exclusions of 1,720 individuals and entities from participation in federal health care programs. The OIG also expects recoveries of more than $3.1 billion in the first half of FY 2014 (about $295 million in audit receivables and $2.83 billion in investigative receivables.