Posted on May 14, 2013 by Debra A. McCurdy

Updated OIG Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs

This post was written by Scot T. Hasselman and Susan A. Edwards.

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) issued an updated “Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ” (Updated Bulletin) on May 8, 2013, answering certain questions the OIG has received from providers and suppliers regarding exclusions and addressing other issues related to exclusions. The Updated Bulletin follows on a Special Advisory Bulletin regarding the same topic published by the OIG in September 1999. Since the OIG issued the 1999 Special Advisory Bulletin, Congress has enacted various statutory provisions that have strengthened the OIG’s authority to exclude individuals from federal health care programs and impose civil monetary penalties (CMPs) related to exclusion. The OIG states that in the development of the Updated Bulletin, it also relied on comments it received in response to a 2010 solicitation of comments on this topic.

The Updated Bulletin reflects a continuation of the OIG’s expansive view of the scope of the federal exclusion authorities, particularly relating to the prohibition against employing or contracting with excluded individuals and entities. The bulletin explains the statutory background of the exclusion and CMP authorities; describes the effect of exclusion; emphasizes the implications of violations of exclusion by an excluded individual and the implications for violating the prohibition against employment or contracting with an excluded individual for the furnishing of items or services paid for by a federal health care program; explains the scope of what conduct involving excluded individuals may lead to overpayment liability and CMPs; and provides guidance to providers and suppliers regarding how to screen for excluded individuals.

In the Updated Bulletin, the OIG clearly explains its broad interpretation of the prohibition on federal health care program payment for any items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person. The OIG points out that this prohibition applies to all methods of federal health care program payment. For example, as the OIG states in the Updated Bulletin, the prohibition would apply to an excluded nurse furnishing services to federal health care program beneficiaries in a hospital, even if the nurse’s services are not separately billed to a federal health care program. Further, the OIG makes clear that this prohibition would also apply to an individual who switches professions within the health care industry (e.g., if the OIG excluded an individual as a pharmacist, and that individual then trained to become a nurse, payment for any items or services furnished by the individual while performing the duties of a nurse would be prohibited). The OIG also explains that the prohibition would include items and services beyond direct patient care, such as the preparation of surgical trays, the review of treatment plans, and the order entry of prescriptions for pharmacy billing purposes. In addition, the Updated Bulletin explains that excluded persons may not furnish administrative or management services that are payable by federal health care programs. Moreover, an excluded individual serving in a leadership role, providing health information technology support, or facilitating human resources would violate the prohibition on payment.

In response to a question, the OIG’s Updated Bulletin addresses whether providers such as laboratories, pharmacies, and imaging centers are subject to liability if they furnish an item or service ordered by or prescribed by an excluded individual. The OIG asserts that such providers could be subject to liability and instructs that in order to avoid liability, such providers “should ensure, at the point of service, that the ordering or prescribing physician is not excluded.”

The OIG also explains that if an excluded individual owns more than a five percent ownership interest in a provider, that provider is potentially subject to permissive exclusion.

In a view that seems to exceed the scope of the applicable regulations, the Updated Bulletin explains that potential CMP liability for contracting with or employing an excluded individual could result even if the provider does not pay the excluded individual for his or her services. For example, the bulletin states that CMP liability could be triggered if a provider’s claim to a federal health care program includes any items or services furnished by an excluded health care professional who works at a hospital or nursing home as a volunteer. (Notably, the OIG broadly interpreted the prohibition for contracting with or employing an excluded individual in the 1999 Bulletin, but has not subjected its previous or current interpretation to notice and comment rulemaking.)

In a footnote, the OIG remarks that a hospital may reduce or eliminate its CMP liability if it can demonstrate that it reasonably relied on a staffing agency to conduct screenings of excluded individuals, and gives the example that such reliance may be demonstrated by contractual language showing that the staffing agency agreed to screen individuals and the hospital exercised due diligence to ensure the staffing agency met this obligation. The OIG later recommends that any provider that relies on contractors to perform exclusion screenings, such as a staffing agency, physician group, or third-party billing or coding company, validate that such contractor performs exclusion screenings by, for example, requesting and maintaining screening documentation from the contractor. Finally, the OIG emphasizes that regardless of whether a screening is performed, who performs a screening, and the relationship between the provider and the excluded individual (e.g., contractor, volunteer, employee), the provider would be liable for overpayments related to an excluded individual and may be subject to CMP liability.

Finally, the OIG provides guidance regarding screening individuals to determine whether a person is excluded from participation in the federal health care programs. In sum, the OIG recommends that providers check the List of Excluded Individuals and Entities (“LEIE”) prior to employing or contracting with persons and then “periodically” during the course of employment or a contract. While the OIG points out that there is no statutory or regulatory requirement to check the LEIE, it states that “screening employees and contractors each month best minimizes potential overpayment and CMP liability.” The Updated Bulletin also notes that CMS issued a State Medicaid Director Letter in 2009 that suggested states require providers to screen all employees and contractors monthly. The OIG also notes that it has received questions regarding whether the U.S. General Services Administration’s System for Award Management database or other sanctions databases should be used in addition to or instead of the LEIE to determine whether a provider has any sanctions against him or her. The OIG recommends that providers rely on the LEIE as the primary database for the purposes of exclusion screening. 
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Posted on May 13, 2013 by Debra A. McCurdy

OIG Publishes Updated Provider Self-Disclosure Protocol

This post was written by Scot T. Hasselman and Susan A. Edwards.

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has issued a revised version of its Provider Self-Disclosure Protocol (Updated SDP), dated April 17, 2013, which established a process for health care providers to voluntarily identify, disclose, and resolve instances of potential fraud involving federal health care programs.  Specifically, this protocol is intended to address:  (1) conduct involving potential false billings; (2) conduct regarding excluded persons; (3) conduct involving potential violations of the Anti-Kickback Statute (AKS); and (4) conduct involving potential violations of the AKS and the Stark Law.

The Updated SDP provides guidance on how to investigate the conduct described above, quantify damages, and report such conduct to OIG to resolve the provider’s liability under OIG’s civil monetary penalty authorities.  The document supersedes the previous OIG Provider Self-Disclosure Protocol issued in 1998 and three previous “Open Letters to Health Care Providers.”  The OIG notes that over the past 15 years, it has resolved over 800 disclosures, resulting in recoveries of more than $280 million to federal health care programs.  The Updated SDP reflects the OIG’s experience with the protocol since 1988, along with feedback it received from the public in response to a June 18, 2012 comment solicitation.  

A summary of the Updated SDP, highlighting notable statements and requirements, is available in our Client Alert.

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Posted on April 25, 2013 by Debra A. McCurdy

Proposed Rule Would Reward Medicare Fraud Tipsters up to $9.9 Million, Revise Medicare Provider Enrollment Regulations

This post was written by Scot T. Hasselman, Andrew C. Bernasconi, Susan A. Edwards and Debra A. McCurdy.

Yesterday the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would dramatically increase the potential reward to an individual who provides a tip leading to the recovery of Medicare funds from a current maximum of $1,000 to a maximum of $9.9 million under the Medicare Incentive Reward Program.  Since 1998, an individual providing information regarding potential Medicare fraud and abuse to the Department of Health & Human Services’ Office of  Inspector General or the Medicare contractor with jurisdiction over the suspected fraudulent provider or supplier may be eligible to receive 10 percent of the Medicare funds ultimately collected from the tip, or $1,000, whichever is less.  Pursuant to the proposed rule CMS issued yesterday, an individual furnishing information that otherwise satisfies the requirements set forth in 42 C.F.R. § 420.405 would be eligible to receive 15 percent of a recovery up to $66 million.  Therefore, a tipster could receive up to a $9.9 million reward for any information provided regarding suspected Medicare fraud and abuse.

In the proposed Medicare Incentive Reward Program rule, CMS explains that it “tentatively project[s] a net increase in recoveries of $24.5 million per year as a result of the proposed changes.”  In addition, CMS notes that it is modeling the proposed Incentive Reward Program changes on a “highly successful” Internal Revenue Services (IRS) reward program that returned “far greater sums than the existing Medicare [Incentive Reward Program].”  Notably, since the implementation of the current Medicare Incentive Reward Program in July 1998, CMS has collected only $3.5 million; in contrast, between 2007 and 2012, the IRS has collected almost $1.6 billion through its reward program.  CMS states in the preamble that it proposes to clarify that it will not pay an award if the same or substantially similar information was the basis for a relators share in a qui tam lawsuit under the federal False Claims Act or a state False Claims Act, or is the basis for a pending state or federal False Claims Act suit.  However, the proposed regulatory language that would codify this change, found at proposed 42 C.F.R. § 420.405(b)(3), does not specify that this provision would apply to state False Claims Acts.

The proposed rule also would pay the reward amount only to the first individual who makes a report.  In addition, among other proposed changes to the regulations found at 42 C.F.R. § 420.405, CMS proposes to emphasize that it has exclusive discretion in determining the amount of a reward and whether the reward criteria are met.  The existing regulation provides for numerous other exceptions and conditions and generally excludes federal and state law enforcement officials, federal government employees, and federal contractors, from eligibility.

CMS also proposes several revisions to Medicare’s provider enrollment regulations, such as:

  • Allowing CMS to deny the enrollment of providers, suppliers, and owners affiliated with an entity that has unpaid Medicare debt;
  • Expanding the instances under which a felony conviction can serve as a basis for denial or revocation of a provider or supplier's enrollment;
  • Enabling CMS to revoke Medicare billing privileges if it determines that the provider or supplier has a pattern or practice of submitting claims for services that fail to meet Medicare requirements; and
  • Limiting the ability of ambulance suppliers to “backbill” for services performed prior to enrollment.

The proposed rule will be published in the April 29, 2013 edition of the Federal Register, and comments will be accepted for 60 days thereafter (June 28, 2013).

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Posted on April 16, 2013 by Debra A. McCurdy

OIG Calls Medicare Supplier Surety Bonds "Underutilized" CMS Tool

The OIG has called on CMS to expand its use of surety bonds for Medicare DMEPOS suppliers, in a report entitled “Surety Bonds Remain an Underutilized Tool to Protect Medicare from Supplier Overpayments.”  Although CMS has required suppliers to obtain a minimum of $50,000 in surety bond coverage per location since 2009, the OIG found that CMS did not have accurate surety bond information for all Medicare suppliers as of 2011, and bonds in effect do not enable the agency to recoup all overpayments. As of August 2011, 1,429 suppliers owed $70 million to Medicare, but $20 million of this amount was owed by 312 suppliers without bonds. Out of the $50 million owed by bonded suppliers, the OIG estimates that $42 million will likely remain uncollected because the overpayment exceeds the $50,000 bond amount. The OIG recommends that CMS: improve oversight of supplier data to ensure accurate reporting; immediately begin recovering outstanding overpayments from suppliers’ surety bonds; consider using ACA authority to require increased surety bond amounts for suppliers receiving high levels of Medicare payments; and specify that collection of debts through surety bonds is based on dates of service. CMS concurred with the OIG recommendations, noting in its response to the report that as of July 2012, it has collected $263,000 in overpayments from sureties, and additional recoveries are expected. CMS also stated that it considering linking DMEPOS surety bond amounts to the volume of a supplier’s billing. CMS also is considering requiring home health agencies and certain other provider and supplier types to obtain and maintain surety bonds as a condition of enrollment. 

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Posted on April 15, 2013 by Debra A. McCurdy

OIG Releases FY 2012 Medicaid Integrity Report

The OIG has released its Medicaid Integrity Program Report for FY 2012, which provides information on the OIG's Medicaid program integrity funding, summarizes significant OIG Medicaid-related reviews and investigations, and highlights Medicaid-related projects included in the OIG’s Work Plan for FY 2013.

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Posted on April 10, 2013 by Debra A. McCurdy

Obama Administration's Proposed FY 2014 Budget Includes $401 Billion in Health Program Savings

Today, the Obama Administration released its proposed federal budget for fiscal year 2014. As widely reported, the budget incorporates an offer the President made to Congress in December 2012 to achieve nearly $1.8 trillion in additional deficit reduction over the next 10 years, including $401 billion in health savings (the Administration observes that this level of cuts would “provide more than enough deficit reduction to replace the damaging cuts required by the Joint Committee sequestration”).

Virtually all provider types – and drug manufacturers – would be impacted by the budget provisions, if adopted as proposed. The budget proposal is certainly subject to change during the legislative process, particularly as the House and Senate leadership pursue alternative budget frameworks, and indeed, gridlock could prevent significant action on entitlement reform this year. Nevertheless, the proposals bear careful monitoring because they could eventually be included in any long-elusive “grand bargain” to reform the Medicare program and reduce the federal debt.

Highlights of the Administration’s Medicare and Medicaid proposals include the following:

Medicare Provider Payments

  • Reform the Medicare physician fee schedule/sustainable growth rate (SGR) formula to provide stable payments followed by payment linked to participation in an “accountable payment model.”
  • Reduce Medicare coverage of bad debts from 65% generally to 25% over three years starting in 2014.
  • Reduce Medicare indirect medical education add-on payments by $11 billion over 10 years.
  • Reduce payment for post-acute care services in several ways.
    • Reduce payment updates for inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), and home health agencies (HHAs) by 1.1 percentage points, beginning in 2014 through 2023 (the update could not fall below 0%). This provision would save $79 billion over 10 years.
    • Adjust the standard for classifying a facility as an IRF (at least 75% of patient cases admitted to an IRF must meet one or more of 13 designated severity conditions), saving about $2.5 billion over 10 years.
    • Equalize IRF and SNF payments for three conditions involving hips and knees, pulmonary conditions, as well as other conditions selected by the Secretary, saving $2.0 billion over 10 years.
    • Reduce by up to 3% payments to SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2017, saving $2.2 billion over 10 years.
    • Implement bundled payments for post-acute care providers (LTCHs, IRFs, SNFs, and HHAs) beginning in 2018. Payments would be bundled for at least half of the total payments for post-acute care providers. Rates based on patient characteristics and other factors would be set to produce a permanent and total cumulative adjustment of -2.85% by 2020. Beneficiary coinsurance would equal levels under current law. This provision would save $8.2 billion over 10 years.
  • Align Medicare payments to rural providers with the cost of care, saving $2 billion over 10 years.
  • Align Medicare payment for clinical laboratory services with private sector rates and encourage electronic reporting of laboratory results.

Prescription Drug Provisions

  • Reduce payment for physician-administered Medicare Part B drugs from 106% of average sales price to 103% of average sales price. Manufacturers would be required to provide a specified rebate in certain instances as determined by the Secretary “to preserve access to care.”
  • Provide Medicaid-level drug rebates for brand name and generic drugs provided to beneficiaries who receive Part D low-income subsidies, saving $123 billion over 10 years.
  • Close the Medicare Part D donut hole by 2015, rather than 2020, by increasing manufacturer discounts to from 50% to 75% beginning in plan year 2015.
  • Lower Medicaid drug costs by clarifying the definition of brand drugs, excluding authorized generic drugs from average manufacturer price calculations for determining manufacturer rebate obligations for brand drugs, making a technical correction to the Affordable Care Act (ACA) alternative rebate for new drug formulations, and calculating Medicaid federal upper limits based only on generic drug prices. These proposals are projected to save $8.8 billion over 10 years. 
  • Encourage the use of generic drugs by Part D low-income subsidy beneficiaries by modifying copayments, saving approximately $7 billion over 10 years. 
  • Improve program integrity for Medicaid drug coverage by directing states to track high prescribers and utilizers of Medicaid prescription drugs; requiring manufacturers to make full restitution to states for any covered drug improperly reported by the manufacturer on the Medicaid drug coverage list; allowing more regular audits and surveys of manufacturers to ensure compliance with Medicaid drug rebate agreement requirements; requiring drugs to be electronically listed with the FDA to receive Medicaid coverage; and expanding penalties for reporting false information for the calculation of Medicaid rebates. 
  • Increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into “pay for delay” agreements and modifying the length of exclusivity on brand name biologics.

Program Integrity/Efficiency Provisions

  • Provide $640 million in combined mandatory and discretionary program integrity funding to implement activities that reduce payment error rates, prevent fraud and abuse, target high-risk services and supplies, and enhance civil and criminal enforcement for Medicare, Medicaid, and CHIP. 
  • Authorize civil monetary penalties or other intermediate sanctions for providers who do not update enrollment records and permit exclusion of individuals affiliated with entities sanctioned for fraudulent or other prohibited actions from federal health care programs. 
  • Expand authority to investigate and prosecute allegations of abuse or neglect of Medicaid beneficiaries in additional health care settings.
  • Exclude radiation therapy, therapy services, and advanced imaging from the in-office ancillary services exception to the prohibition against physician self-referrals (Stark law), except in cases where a practice meets certain accountability standards, as defined by the Secretary.
  • Require prior authorization of advance imaging services.
  • Require prepayment review or prior authorization for power mobility devices.
  • Allow the Secretary to create a system to validate practitioners’ orders for certain high-risk items and services.

Other Medicare Provisions

  • Revise beneficiary cost-sharing requirements, including increased income-related premiums under Parts B and D, a new home health copayment, and increased premiums for beneficiaries with Medigap policies with particularly low cost-sharing requirements.
  • Increase the minimum Medicare Advantage (MA) coding intensity adjustment (which decreases MA plan payments to reflect differences in coding practices between Medicare fee-for-service and MA) and align employer group waiver plan payments with MA bids, saving $19 billion over 10 years. 
  • Strengthen the Independent Payment Advisory Board (IPAB) by reducing the target rate of Medicare cost growth from gross domestic product plus one percentage point to plus 0.5 percentage point.
  • Expand the availability of Medicare data released to physicians and other providers for performance improvement, fraud prevention, value-added analysis, and other purposes.

Medicaid Provisions

  • Base Medicaid rates for durable medical equipment on Medicare rates to save $4.5 billion over 10 years.
  • Align Medicaid Disproportionate Share Hospital (DSH) payments with expected levels of uncompensated care to save $3.6 billion over 10 years. 
  • Affirm Medicaid’s position as a payer of last resort when another entity is legally liable to pay claims.

A 131-page Department of Health and Human Services (HHS) “Budget in Brief” summary discusses these provisions in greater detail, and also addresses other HHS agency budget proposals and discusses HHS’s implementation of private health insurance protections and programs under the ACA.
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Posted on March 27, 2013 by Debra A. McCurdy

OIG Special Fraud Alert Deems Physician-Owned Distributors (PODs) As "Inherently Suspect" Under Anti-Kickback Statute

On March 26, 2013, the HHS Office of Inspector General (OIG) released a Special Fraud Alert highlighting the risks associated with PODs -- physician-owned entities that sell (or arrange for the sale of) implantable medical devices ordered by their physician-owners for use in procedures the physician-owners perform on their own patients at hospitals or ambulatory surgical centers. Building on previous OIG and Congressional scrutiny of PODs, the Special Fraud Alert details specific attributes and practices of PODs that the OIG believes “produce substantial fraud and abuse risk and pose dangers to patient safety.”  A Reed Smith analysis of the Alert is available on our Life Sciences Legal Update blog.

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Posted on March 12, 2013 by Debra A. McCurdy

Congressional Hearings

There have been many Congressional health policy hearings recently, with more scheduled. Highlights include the following:

  • House Ways and Means Committee. Recent hearings have examined traditional Medicare’s benefit design and tax-related provisions in the ACA, and on March 15, the Health Subcommittee is holding a hearing on the Medicare Payment Advisory Commission's annual March Report to the Congress.
  • House Energy and Commerce Committee. The Health Subcommittee has reviewed innovative ways to fight health care fraud and abuse, and the panel has scheduled hearings on the impact of the ACA on jobs (March 13) and health insurance premiums (March 15). A March 18 hearing will focus on “Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis.”
  • Senate Hearings. The Finance Committee held a hearing on the status of CMS delivery reform efforts. A Health, Education, Labor and Pensions Committee hearing examined animal drug user fees. The Commerce Committee has reviewed transparency in the individual health insurance market. An Aging Committee hearing focused on ways to strengthen Medicare.
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Posted on February 18, 2013 by Debra A. McCurdy

CMS Releases FY 2011 RAC Report, RAC "Myths" Document

CMS has released a report to Congress on “Recovery Auditing in the Medicare and Medicaid Programs for Fiscal Year 2011”.  According to CMS, recovery auditors identified and corrected 887,291 claims amounting to $939.3 million in improper payments in fiscal year 2011; while most of the improper payments ($797.4 million) were overpayments, the auditors also were responsible for $141.9 million in underpayments being repaid to providers and suppliers. After considering all fees (including contingency fees), costs, appeals, and underpayments, the Medicare fee-for-service (FFS) Recovery Audit Program returned $488.2 million to the Medicare Trust Fund in FY 2011. CMS discusses procedural changes adopted to decrease the Recovery Auditors errors, and according to CMS, only 2.9% of all Recovery Auditor determinations were challenged and later overturned on appeal. The report notes that short-stay inpatient hospital admission issues represented a significant portion of the Medicare FFS error rate and also represent a large portion of FY 2011 overpayment collections. The report also includes, among other things, an update on the status of recovery audit contracting in the Medicare Advantage, Medicare prescription drug, and Medicaid programs, along with a RAC prepayment review demonstration. On a related note, CMS has posted a “Recovery Audit Program Myths” document, addressing such issues as claims denial rates and review criteria, presumably to combat persistent provider criticism of the program.

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Posted on February 18, 2013 by Debra A. McCurdy

Finance Committee Compilation of Public Recommendations to Address Health Care Fraud and Abuse

A bipartisan group of Senate Finance Committee members has released a report summarizing recommendations solicited from public and private sector health care stakeholders for improving efforts to address Medicare and Medicaid waste, fraud, and abuse. During the new session of Congress, the Senators intend to review and consider the proposals and recommendations submitted by approximately 150 individual health care professionals, corporate stakeholders, and associations and work to develop administrative recommendations and potential legislative actions. In general, the stakeholder recommendations focus on five areas: improper payments, beneficiary protection, audit burden, data management, and enforcement . Recommendations include, for example, eliminating duplication in federal and state Medicare/Medicaid anti-fraud programs, improving the efficiency of the various CMS audit contractors, and creating an advisory panel to provide clinical input as part of contractor oversight.  

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Posted on February 18, 2013 by Debra A. McCurdy

FY 2012 Health Care Fraud and Abuse Control Program Report

On February 11, 2013, the Obama Administration announced that anti-fraud efforts under the Health Care Fraud and Abuse Control Program (HCFAC) recovered a record-breaking amount of $4.2 billion in FY 2012. More specifically, in 2012 the Justice Department opened 1,131 new criminal health care fraud investigations involving 2,148 potential defendants, and a total of 826 defendants were convicted of health care fraud-related crimes. The DOJ also opened 885 new civil investigations, obtained settlements and judgments of more than $3 billion in FY 2012 under the False Claims Act, and collected nearly $1.5 billion in fines and forfeitures under the Federal Food, Drug and Cosmetic Act. Obama Administration officials emphasized that efforts to reduce fraud will continue to expand with new tools and resources provided by the ACA, including enhanced screening and enrollment requirements (which have eliminated nearly 150,000 ineligible providers from the Medicare rolls), increased data sharing across the government, expanded overpayment recovery efforts, and greater oversight regarding private insurance.

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Posted on January 30, 2013 by Debra A. McCurdy

OIG Continues to Fault Efforts to Prevent Medicare Fraud in Community Mental Health Centers

The OIG has examined CMS efforts to prevent fraud and abuse at community mental health centers (CMHCs), which provide partial hospitalization program services (structured outpatient mental health treatment programs) to qualifying Medicare beneficiaries. The OIG has previously reported that CMHCs may be particularly vulnerable to fraud, waste, and abuse involving PHP services, with approximately half of CMHCs exhibiting questionable billing in 2010. The OIG’s new report is entitled, Vulnerabilities in CMS's and Contractors' Activities to Detect and Deter Fraud in Community Mental Health Centers. The OIG found that most Medicare Administrative Contractor (MAC) and Zone Program Integrity Contractor (ZPIC) activities to detect and deter CMHC fraud in 2010 were actually performed in conjunction with the CMS-led South Florida High-Risk Provider Enrollment Project; other MACs and ZPICs performed minimal activities to detect and deter fraudulent CMHC billing despite having jurisdiction over fraud-prone areas. The OIG also found that Medicare paid noncompliant CMHCs after their revocations were effective and while their revocations were being approved. To address program vulnerabilities, the OIG recommends that CMS: implement additional CMHC fraud mitigation activities in fraud-prone areas; improve tracking of revocations; coordinate activities to deter CMHC fraud in Florida; and follow up on payments made to CMHCs after revocations.

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Posted on January 30, 2013 by Debra A. McCurdy

OIG Calls for Improvements to Medicare Parts C & D Benefit Integrity Activities

The OIG recently identified barriers to the effectiveness of the Medicare Drug Integrity Contractor (MEDIC) in performing Medicare Parts C and D benefit integrity activities between April 2010 and March 2011. For instance, the MEDIC reported that it does not have access to centralized Part C data, it lacks access to certain prescription drug event data, and there is no mechanism to recover payments from Part C or Part D plan sponsors when law enforcement agencies do not accept these cases for further action. Moreover, while the MEDIC has benefit integrity responsibility for both Medicare Parts C and D, the OIG determined that Part C investigations and case referrals represented a small percentage of its activities (only 8% of investigations and referrals involved Part C only; the majority were Part D only). The OIG makes a series of recommendations to, among other things: improve the data available to the MEDIC (including information from pharmacies, physicians, and pharmacy benefit managers); expand the ability of the MEDIC to recover payments from Part C and Part D plan sponsors; and require Part C and Part D plan sponsors to refer potential fraud and abuse incidents to the MEDIC. For details, see the full report, MEDIC Benefit Integrity Activities in Medicare Parts C and D.

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Posted on January 14, 2013 by Debra A. McCurdy

Obama Administration's Regulatory Agenda Points to Busy 2013 for HHS

On January 8, 2013, the Obama Administration published its latest semiannual regulatory agenda, outlining planned regulatory initiatives in a number of policy areas. The Federal Register version of the agenda includes only a portion of the regulations in the pipeline, however; the full agenda has been posted on the Office of Management and Budget (OMB) web site. Major Department of Health and Human Services (HHS) regulations are highlighted after the jump.

  • An HHS Office of Inspector General (OIG) proposed rule that would add new/modify existing safe harbors under the anti-kickback statute; add new/revise existing regulations governing OIG's authority to impose civil money penalties and assessments; add new/revise existing regulations governing OIG's exclusion authority; and codify new exceptions to the beneficiary inducement prohibition (expected July 2013);
  • A final Centers for Medicare & Medicaid Services (CMS) rule implementing Affordable Care Act (ACA) provisions related to Medicaid reimbursement for covered outpatient drugs (expected in August 2013);
  • A CMS proposed rule to establish Medicare payment safeguards to prevent providers and suppliers that do not meet Medicare requirements from remaining enrolled in or submitting claims to Medicare (expected May 2013);
  • Proposed emergency preparedness requirements for Medicare and Medicaid participating providers and suppliers (expected in July 2013);
  • A final CMS rule establishing requirements for disclosure of skilled nursing facilities' ownership (expected May 2013);
  • A final rule on long-term care facility agreements with hospice agencies (expected October 2013);
  • A proposed rule to establish a prospective payment system for Federally Qualified Health Centers (expected June 2013);
  • Annual Medicare payment update rules (various dates);
  • Various rules implementing insurance-related provisions of the ACA (various dates);
  • A final rule modifying HIPAA privacy, security, enforcement, and breach notification rules (expected but not released in December 2012);
  • An advance notice of proposed rulemaking to establish a methodology allowing an individual harmed by an offense punishable under HIPAA to receive a percentage of any civil money penalty or monetary settlement collected (expected March 2013);
  • A final rule to enhance human subjects research protections (expected April 2013); and
  • A Food and Drug Administration (FDA) final rule establishing a unique device identification system for medical devices (expected May 2013).

There are also some surprises on the Administration’s list of “long-term actions” – including the long-overdue final ACA “Sunshine Act” rule requiring applicable manufacturers of drugs, devices, biologicals, or medical supplies to annually report certain payments to physicians or teaching hospitals (“final action” listed as December 2014). Other long-term actions include a final rule implementing ACA requirements related to reporting and returning of overpayments (February 2015); a variety of rules dealing with the 340B discount drug program (timing listed as “to be determined”); and a final HIPAA privacy rule on accounting for disclosures under the Health Information Technology for Economic and Clinical Health Act (TBD).
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Posted on January 14, 2013 by Debra A. McCurdy

OIG Assesses Medicare Oversight of Home Health Agencies

The OIG has examined CMS and Medicare contractor oversight of home health agencies (HHAs) in light of persistent concerns about Medicare fraud, waste, and abuse involving HHAs. In the report, “CMS and Contractor Oversight of Home Health Agencies,” the OIG concludes that the effectiveness of such oversight efforts is mixed. While two Medicare Administrative Contractors (MACs) reviewed by the OIG prevented a total of $275 million in improper payments and referred 14 instances of potential fraud in 2011, four Zone Program Integrity Contractors (ZPICs) did not identify any HHA vulnerabilities. The OIG also found limited instances of CMS inappropriately paying HHAs with suspended or revoked billing privileges. The OIG makes a series of recommendations in this area, including calling on CMS to establish additional contractor performance standards for high-risk providers in fraud-prone areas and to prevent inappropriate payments made to HHAs with suspended or revoked billing privileges. CMS concurred with the OIG recommendations. 

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Posted on December 19, 2012 by Debra A. McCurdy

Justice Department Reports Nearly $5 Billion in False Claims Act Recoveries for FY 2012

The Department of Justice recently announced that it secured a record $4.9 billion in settlements and judgments in civil fraud cases in FY 2012, including health care fraud recoveries totaling more than $3 billion. The Department notes that some of the largest recoveries during the year – representing nearly $2 billion -- involved false claims for drugs and medical devices under federally insured health programs (with an additional $745 million returned to state Medicaid programs). The Department also reports that in FY 2012, a record 647 qui tam/whistleblower suits were filed and a record $3.3 billion was recovered in such suits.

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Posted on December 19, 2012 by Debra A. McCurdy

GAO Calls for Improvements in Use of Medicare Prepayment Edits

In light of a continued high rate of Medicare fee-for-service improper payments (8.6% in FY 2011), the GAO recently assessed the use of Medicare prepayment edits and CMS's oversight of Medicare Administrative Contractors (MACs) that process claims.  In the report, "Medicare Program Integrity: Greater Prepayment Control Efforts Could Increase Savings and Better Ensure Proper Payment," the GAO estimates that while the use of prepayment edits saved Medicare at least $1.76 billion in FY 2010, it believes savings could have been greater if prepayment edits had been more widely used. For instance, the GAO found more than $100 million in Medicare payments that were inconsistent with a sample of three local coverage determinations (pertaining to monitored anesthesia care, parathormone, and noninvasive cerebrovascular studies) and that could have been identified using automated edits. The GAO also found weaknesses associated with CMS edit processes based on national policies, such as lack of specific time frames for implementing edits, flaws in the structure of some edits, and lack of centralized implementation. GAO recommends that CMS take a series of steps to strengthen its use of prepayment edits, such as implementing medically unlikely edits that assess all quantities provided to the same beneficiary by the same provider on the same day; encouraging more information sharing about effective edits, and assessing the feasibility of increasing incentives for edit use. HHS generally agreed with the recommendations.

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Posted on December 19, 2012 by Debra A. McCurdy

GAO Reviews Effectiveness of Medicaid Program Integrity Efforts

A recent GAO report, “Medicaid Integrity Program: CMS Should Take Steps to Eliminate Duplication and Improve Efficiency,” points to a number of shortcomings in CMS Medicaid program integrity efforts. Among other things, the GAO found that Medicaid Integrity Group's (MIG) oversight and support activities had mixed results in achieving the goal of enhancing program integrity efforts. Moreover, the MIG’s hiring of separate review and audit contractors for its National Medicaid Audit Program was inefficient and duplicative. The GAO recommends that CMS: eliminate duplication by merging contractor functions, use comprehensive reviews to better target audits; work with states to ensure reliable reporting of their program integrity recoveries; discontinue state program integrity assessments that overlap other, more current data sources; and reevaluate its return on investment methodology.

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Posted on December 17, 2012 by Debra A. McCurdy

OIG Releases 2012 Compendium of Unimplemented Recommendations

The OIG’s December 2012 Compendium of Unimplemented Recommendations highlights unimplemented OIG recommendations that the OIG believes represent significant opportunities for action in FY 2013. The report includes recommendations made through FY 2011 that were not fully implemented as of December 2012. The OIG’s priority open recommendations, which in the OIG’s view represent the most significant opportunities to positively impact HHS’s programs, include the following:

  • Medicare Parts A and B: Eliminate or reduce Medicare payments for hospital bad debts; adjust global surgery fees to reflect the number of evaluation and management services actually being provided by physicians; reduce the rental period for Medicare home oxygen equipment; ensure that hospice claims for beneficiaries in nursing homes comply with Medicare coverage requirements; implement unannounced site visits and other actions to prevent improper payments to independent diagnostic testing facilities; and ensure that claims for lower limb prostheses meet requirements.
  • Medicare Part C/Medicare Advantage (MA): Modify payments to MA organizations; and MA aggressive marketing/ensure that new enrollees understand plan rules.
  • Medicare Part D Prescription Drug Benefit: Develop a comprehensive safeguard strategy for overseeing Part D prescription drug plans; ensure the accuracy of sponsors’ cost estimates in Part D bids; ensure the validity of prescriber identifiers on claims; and ensure that Part D sponsors have information needed to make accurate coverage and reimbursement determinations for atypical antipsychotic drugs.
  • Medicaid Reviews: Develop national pharmacy acquisition cost data as a benchmark for reimbursing prescription drugs; establish a connection between the calculations of Medicaid drug reimbursements and rebates; extend the additional rebate payment provisions for brand-name drugs to generic drugs; limit Medicaid payments to costs and require that payments returned by public providers be used to offset the federal share; and improve Medicaid children’s utilization of preventive screening services.
  • Public Health Reviews: Centers for Disease Control and Prevention/improve states’ and localities’ medical surge preparedness for pandemics; FDA/ensure that clinical investigators disclose all financial interests; FDA/improve and strengthen food facilities’ compliance with records requirements for traceability of food products; Indian Health Service/reduce overpayments for contract health services hospital claims and cap payments for nonhospital services at Medicare rates; and National Institutes of Health (NIH)/Require NIH grantee institutions to identify, report, and address institutional financial conflicts of interest.
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Posted on November 29, 2012 by Debra A. McCurdy

CMS Announces 8.5% Medicare Error Rate in 2012; Majority of Medicare DME Claims in Error.

On November 21, 2012, CMS announced that theFY 2012 Medicare fee-for-service program improper payment rate is 8.5% -- which represents $29.6 billion in improper payments. While CMS reports that the error rate for most Medicare provider types was in the 4.8% – 9.9% range, durable medical equipment (DME) suppliers had a 66% improper payment rate. Additionally, the Medicare Advantage/Part C composite improper payment error rate estimate for FY 2012 (based on calendar year 2010 payments) is 11.4%, the Part D prescription drug program composite improper payment error rate estimate is 3.1% (also based on CY 2010 payments), and the FY 2012 Medicaid improper payment error rate is 7.1%.  

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Older Entries

November 29, 2012 — OIG Outlines Top HHS Management Challenges

November 29, 2012 — OIG "Portfolio Report" on Personal Care Services

November 29, 2012 — GAO Assesses CMS Fraud Prevention System Implementation

November 28, 2012 — OIG Reports Almost $7 Billion in Audit/Investigation Recoveries for FY 2012

November 14, 2012 — OIG Examines Inappropriate Medicare Payments to SNFs

November 12, 2012 — Affordable Care Act and the Post-Election Implications for Radiology

October 16, 2012 — GAO Spotlights Top Provider Types for Criminal/Civil Health Fraud

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 15, 2012 — OIG Compliance Roundtable: "The Next Generation of Corporate Integrity Agreements"

October 15, 2012 — OIG Faults CMS Failure to Implement HHA Surety Bond Rule

October 11, 2012 — OIG to Host "Outlook 2013" Webcast (Oct. 24)

September 28, 2012 — Hospitals Return Fire After Administration Warns Hospitals Against Gaming Payments through Electronic Health Records

September 27, 2012 — Congressional Health Policy Hearings

September 27, 2012 — OIG Finds Lax CMS Healthcare Integrity and Protection Data Bank Reporting

September 5, 2012 — OIG Identifies Questionable Community Mental Health Center Billing

September 5, 2012 — OIG Offers Web Course on Safeguarding Medical Identity.

August 31, 2012 — U.S. District Court Decides Whistleblower Cannot Rely on Stolen Patient Records

August 20, 2012 — Fifth Circuit Upholds Ability of Government Employee Fraud Investigators to Bring Qui Tam False Claims Actions

August 17, 2012 — CMS Recovery Audit Prepayment Review Demonstration to Launch Aug. 27, 2012 (Covering One Initial MS-DRG)

August 17, 2012 — Sept. 1, 2012 Start Date for Power Mobility Device Demonstration

August 17, 2012 — CMS Posts "Provider Compliance Interactive Map"

August 17, 2012 — OIG Reports on Questionable Medicare HHA Billing

August 8, 2012 — Putting Contractors on Notice: The New Public-Private Partnership Joins DOJ, HHS, and Private Sector Partners to Combat Health Care Fraud

August 4, 2012 — CMS Announces August 27, 2012 Start Date for Recovery Audit Prepayment Review Demonstration; Provider Call Scheduled for Aug. 9

July 31, 2012 — Obama Administration Public-Private Partnership Targets Health Care Fraud Prevention

July 19, 2012 — OIG Highlights Potential ZPIC Conflicts of Interest

June 26, 2012 — CMS Officially Announces Potential Inherent Reasonableness Payment Adjustment for Medicare Retail Diabetic Testing Supplies; Meeting Set for July 23

June 18, 2012 — OIG Considering Revisions to Provider Self-Disclosure Protocol

June 18, 2012 — June Congressional Health Policy Hearings

June 18, 2012 — Medicare Payments for Outpatient Services Before/During Inpatient Stay

June 18, 2012 — OIG Revises State Medicaid Fraud Control Unit (MFCU) Performance Standards

June 13, 2012 — CMS Call on Prior Authorization for Power Mobility Devices (PMD) Demonstration (June 28)

May 31, 2012 — OIG Releases Spring 2012 Semiannual Report

May 31, 2012 — OIG Reports on Obstacles to Collecting Medicare Overpayments

May 31, 2012 — New "CMS Provider Screening Innovator Challenge" Launched

May 14, 2012 — Three OIG Reports Review Medicare E/M Services

May 14, 2012 — Finance Committee Members Seek Public Input on Medicare/Medicaid Fraud

May 14, 2012 — Congressional Health Policy Hearings

May 14, 2012 — GAO Reviews Medicare Provider/Supplier Screening Efforts

May 14, 2012 — GAO Report on Impact of Fraud and Abuse Laws on Medicare Financial Incentive Programs

May 11, 2012 — OIG Examines Retail Pharmacy Billing for Part D Drugs

April 23, 2012 — April Congressional Health Policy Hearings and Markups

April 23, 2012 — OIG Concludes Modifier Failed to Block Inappropriate DME Claims

April 23, 2012 — OIG Finds Limited Benefit of Medicare-Medicaid Data Match Program

April 23, 2012 — OIG Issues FY 2011 Medicaid Integrity Program Report

April 23, 2012 — OIG Reviews Questionable Medicare Billing for IDTF Services

April 2, 2012 — OIG Examines Medicaid Payments for Therapy Services

April 2, 2012 — OIG Release Report from Pharmaceutical Compliance Roundtable

April 2, 2012 — MACPAC Report to Congress on Medicaid, CHIP Policy

March 29, 2012 — Congressional Health Policy Hearings

March 14, 2012 — CMS Releases Redesigned Medicare Benefit Statements

March 14, 2012 — CMS Launches Medicare Advantage (MA) Audit Initiative

March 14, 2012 — 340B Enforcement Activities.

March 14, 2012 — OIG Report on Excluded Providers in Medicaid Managed Care Plans

March 14, 2012 — OIG Reports Examine Home Health Agency (HHA) Issues

March 14, 2012 — OIG Issues Fraud Alert for People with Diabetes

March 14, 2012 — OIG Compliance Toolkit for Health Care Boards

March 12, 2012 — CMS Finalizes Revisions to Medicare DMEPOS Supplier Standards

February 29, 2012 — False Claims Act Developments: 2nd Circuit to Consider Whether In-House Lawyer can be a Qui Tam Relator

February 28, 2012 — CMS Proposed Rule on Reporting and Returning of Medicare Overpayments Under the ACA

February 28, 2012 — Maximum Medicaid RAC Contingency Fees for DME Overpayments

February 28, 2012 — OIG Examines MA Organizations' Identification of Potential Fraud & Abuse

February 28, 2012 — FY 2011 Health Care Fraud and Abuse Control Program Report

February 14, 2012 — President Obama Proposes FY 2013 Budget

February 13, 2012 — OIG Cautions Physicians on Reassigning Medicare Billing Rights

February 13, 2012 — CMS Announces New Start Date for Recovery Audit Prepayment Review, Power Mobility Device Demonstrations

February 13, 2012 — CMS Guidance on Termination of Medicaid Provider Participation

January 25, 2012 — CMS Establishes Procedures for Claims Against DMEPOS Surety Bonds

January 25, 2012 — New OIG Compliance Videos/Podcasts

January 5, 2012 — GAO Report on Pediatric Medical Devices

January 5, 2012 — Annual OIG Solicitation of New Safe Harbors, Special Fraud Alerts

January 5, 2012 — CMS Issues ACA Provider Screening/Enrollment Informational Bulletin

January 5, 2012 — CMS Delays Recovery Audit Prepayment Review, Power Mobility Device Prior Authorization Demonstrations

January 5, 2012 — OIG Examines Program Integrity Issues with New DMEPOS Suppliers

January 5, 2012 — OIG Focuses on Medicaid Managed Care Fraud and Abuse Concerns

January 5, 2012 — Justice Department FCA Recoveries Top $3 Billion in FY 2011

January 4, 2012 — OIG Identifies Part D Oversight Gaps

January 4, 2012 — OIG Report on Portable X-Ray Supplier Billing Patterns

December 20, 2011 — CMS Call on Recovery Auditor Prepayment Review Demo (Dec. 21)

December 13, 2011 — CMS Announces FY 2011 RAC Recovery Amounts

December 13, 2011 — December Congressional Health Policy Hearings

December 13, 2011 — OIG Posts Compliance Training Videos/Podcasts

November 30, 2011 — New CMS Demonstration Programs Target Medicare Improper Payments

November 30, 2011 — OIG Issues Semiannual Report for Second Half of FY 2011

November 29, 2011 — CMS Hosts Orlando Symposium on Empowering Minorities (Dec. 14-16)

November 14, 2011 — CMS Announces Changes to Medicare Overpayment Notification Process

November 14, 2011 — OIG Highlights Medicaid Rebate Program, Indian Health Services (IHS) Issues

October 28, 2011 — CMS Describes Predictive Modeling Program to Detect Medicare Fraud

October 14, 2011 — OIG Proposes Revisions to Performance Standards for State Medicaid Fraud Control Units, Posts Interactive MFCU Statistical Map

October 14, 2011 — CMS Releases FY 2010 RAC Report

October 14, 2011 — OIG FY 2012 Work Plan Released

September 30, 2011 — Legislative Language Released for President Obama's Deficit Plan

September 29, 2011 — Medicaid RAC Program

September 29, 2011 — OIG Report on DMEPOS Surety Bonds

September 29, 2011 — CMS Call: Revalidation of Medicare Provider Enrollment (Oct. 27)

September 27, 2011 — OIG Reviews Place-of-Service Coding for Physician Services

September 27, 2011 — OIG "Spotlight" on IDTFs

September 1, 2011 — OIG Examines IDTF Compliance with Medicare Standards

September 1, 2011 — OIG Reviews Questionable Billing for Lower Limb Prostheses

September 1, 2011 — GAO Report Examines Effectiveness of Medicare Integrity Program.