OIG Issues Special Fraud Alert on Lab Payments to Referring Physicians

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.

OIG Highlights Inconsistencies in State Reporting of the Federal Share of Medicaid Drug Rebates

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 Report Concludes Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles

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.

OIG Examines Medicare LTCH Interrupted Stay Policy

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. 

OIG Issues Advisory Bulletin Impacting Independent Charity Patient Assistance Programs

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.

OIG Report Summarizes State Requirements for HHA Employee Background Checks

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.

OIG Releases Spring Semiannual Report Highlighting Major Program Integrity Efforts

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.

OIG Proposed Rule Would Expand Civil Monetary Penalty Authority

On the heels of its proposed rule to expand its health program exclusion authority, the Office of Inspector General (OIG) of the Department of Health and Human Services has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations. The rule would codify the OIG’s expanded statutory authority under the Affordable Care Act to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios, some of which could extend beyond what is currently permitted.

Reed Smith attorneys have prepared a Client Alert summarizing and analyzing the OIG’s proposed rule, including the various scenarios under which CMPs could be issued under the proposed regulations, such as: failure to report and return an overpayment; failure to grant OIG timely access to records upon request; ordering or prescribing items or services while excluded from a federal health care program, as well as arranging or contracting with an individual or entity who meets this criteria; making false statements or omitting or misrepresenting material facts in an application, bid, or contract; and failing to submit or certify drug-pricing and product information in a timely manner. In addition, the alert covers the changes in technical language proposed by OIG to clarify and more clearly define the scope of CMP regulations.

The Client Alert is available here.

HHS OIG Proposes Expansion of Exclusion Authorities

On May 9, 2014, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) published a proposed rule that would significantly expand the exclusion regulations applicable to persons or entities that receive, directly or indirectly, funds from federal health care programs (the Proposed Rule). The Affordable Care Act (ACA) expanded the OIG’s authority for exclusion, and authorized the use of testimonial subpoenas in investigations of exclusion cases. In this Proposed Rule, the OIG incorporates these statutory changes, revises the definitions applicable to exclusions, proposes early reinstatement procedures, and offers a number of proposed policy changes as to when and how exclusions may take place.

Reed Smith has prepared a Client Alert that provides an overview of the Proposed Rule, including: proposed revisions to definitions; new grounds for exclusion; clarifications to existing regulations to add mitigating and aggravating factors; early reinstatement procedures; and proposed procedural changes in the OIG’s exclusion authorities. In particular, we discuss the OIG’s assertion that there should be no statute of limitations within which it would have to seek exclusion. This limitless look-back authority could place a tremendous burden on providers and suppliers, since their conduct and compliance efforts could be second-guessed many years into the future, when supporting documentation and witnesses may be long gone. We also discuss how these proposed changes to the OIG’s exclusion authorities could impact the debarment authority applicable to government contracts more generally.

The Client Alert is available here.

Another OIG Fraud Rule in the Pipeline: Anti-kickback Safe Harbors, CMPs for Beneficiary Inducements, Gainsharing

On the heels of publication of sweeping proposed rules to expand its exclusion and civil monetary penalty (CMP) authorities, the HHS Office of Inspector General (OIG) is seeking White House clearance of another rule to expand its Medicare and state health care program fraud and abuse authorities. Specifically, yesterday the OIG sent to the Office of Management and Budget (OMB) a proposed rule that would add new anti-kickback safe harbors to reflect statutory changes, codify the Affordable Care Act’s definition of "remuneration," and add a gainsharing CMP regulation. The OIG also has indicated that a separate rulemaking on inflation adjustment for CMPs will be forthcoming, but that regulation has not yet been submitted to OMB. The OIG considers each of the proposed rules to be a stand-alone, independent rule, although there is obviously overlap in the subject matter.  We will continue to closely follow these regulatory developments.

OIG Urges CMS to Recoup Payments to Medicare Advantage Plans for Unlawfully-Present Beneficiaries

According to a recent OIG report, CMS made $26.2 million in payments to Medicare Advantage (MA) organizations for approximately 1,600 unlawfully present beneficiaries from 2010 through 2012, even though federal health care benefits are not allowable for individuals who are not lawfully present in the United States. The OIG attributes to inappropriate payments to CMS’s failure to notify the MA organizations of the unlawful-presence information in its data systems; as a result, MA organizations could not prevent unlawfully present beneficiaries from enrolling or disenroll beneficiaries whose unlawful-presence status changed after they had enrolled. The OIG recommends that CMS recoup these payments and implement policies and procedures (consistent with policies under the fee-for-service program) to notify MA organizations of unlawful-presence information.

OIG Examines Medicare Part B Payments for Compounded Drugs

The HHS OIG has examined Medicare Part B payments for compounded drugs and Medicare Administrative Contractors' (MAC) procedures for reviewing and processing claims for compounded drugs, in light of safety concerns involving a 2012 meningitis outbreak and increased scrutiny of compounded drugs. According to the OIG, neither CMS nor MACs tracked the number of Part B claims or payment amounts for compounded drugs, nor do Part B claims contain information that can be used to systematically identify claims for compounded drugs. The OIG observes that the current “inability to track claims for compounded drugs and identify the compounding pharmacies limits the ability of CMS and MACs to take steps that could stop payments for compounded drugs produced in violation of the [Federal Food, Drug, and Cosmetic] Act. The OIG therefore recommends that CMS (1) establish a method to identify Medicare Part B claims for compounded drugs, (2) explore the possibility of requiring providers to identify on Part B claims the pharmacy that produced the compounded drug, and (3) consider conducting descriptive analyses of Part B claims for compounded drugs.

OIG Proposes Rules to Expand Exclusion, CMP Authorities

On May 9, 2014, the Office of Inspector General (OIG) of the Department of Human Services (HHS) published a proposed rule that would significantly expand the exclusion regulations applicable to persons or entities that receive, directly or indirectly, funds from federal health care programs. The Affordable Care Act (ACA) expanded the OIG’s authority for exclusion and authorized the use of testimonial subpoenas in investigations of exclusion cases. In this proposed rule, the OIG incorporates these statutory changes, revises the definitions applicable to exclusions, proposes early reinstatement procedures, and offers a number of proposed policy changes as to when and how exclusions may take place. Comments on the proposed rule are due July 8, 2014. 

Separately, on May 12, the OIG published a proposed rule that would implement the ACA’s expanded civil monetary penalty (CMP) authorities, including penalties for: failure to grant OIG timely access to records; ordering or prescribing while excluded; making false statements, omissions, or misrepresentations in an enrollment application; failure to report and return an overpayment; and making or using a false record or statement that is material to a false or fraudulent claim. The proposed rule addresses when and how these CMPs are applied, the methodology for calculating the penalties, and the liability guidelines under other OIG authorities. Comments will be accepted until July 11, 2014. Reed Smith is preparing Client Alerts regarding both rules, which will be available shortly.

FY 2013 Medicaid Integrity Program Report

The OIG’s “Medicaid Integrity Program Report for Fiscal Year 2013,” released earlier this month, provides details on funding for the OIG's Medicaid program integrity efforts, summarizes significant OIG Medicaid-related reviews and investigations, highlights Medicaid Fraud Control Unit activities, and notes Medicaid-related projects included in the OIG’s Work Plan for FY 2014.

CMS Rejects OIG Call to Limit Medicare OPPS Rates for ASC-Approved Procedures to ASC Rates

In a recent report, the HHS Office of Inspector General (OIG) recommended that CMS limit Medicare hospital outpatient prospective payment system (OPPS) payments for procedures that can be safely performed in an ambulatory surgical center (ASC), given that ASC payments are typically lower than the corresponding OPPS payments. According to the OIG, Medicare would save as much as $15 billion for CYs 2012 through 2017 if CMS reduces OPPS rates to ASC payment levels for ASC-approved procedures performed on beneficiaries with low-risk or no-risk medical profiles (which the Agency for Healthcare Research and Quality estimates represents 68% of hospital patients 65 and older); beneficiaries would realize additional out-of-pocket savings. The OIG observes that its proposal would require legislative changes to current budget neutrality rules to prevent resulting savings from being redistributed in the form of higher payments for other procedures. Under the OIG proposal, outpatient departments would continue to receive the standard OPPS payment rate for ASC-approved procedures that must be provided in an outpatient department because of a beneficiary’s individual clinical needs.

CMS disagreed with the OIG’s recommendations, which are not binding on the agency. CMS noted that because most ASC rates are based on OPPS rates, the OIG’s recommendations may raise “circularity” concerns with the respect to the rate calculation process. Moreover, CMS observes that the OIG suggests no specific clinical criteria to distinguish patients that can be adequately treated in an ASC relative to the hospital outpatient setting, which would be needed to act on these recommendations. The OIG stands by its recommendations, however, and urges CMS to take the necessary steps to implement them.

The OIG prepared its report, “Medicare and Beneficiaries Could Save Billions If CMS Reduces Hospital Outpatient Department Payment Rates for Ambulatory Surgical Center-Approved Procedures to Ambulatory Surgical Center Payment Rates," in response to a congressional request.

Will Physician Payment Sunshine Act Data Usher in a New Era of False Claims Act Litigation?

This post was authored by Scot Hasselman, Elizabeth Carder-Thompson, Katie Pawlitz and Jillian Riley.

While attention has been focused on Medicare physician payment data released by CMS yesterday, upcoming Sunshine Act data will shine a new spotlight on financial relationships between physicians and pharmaceutical and medical device companies – with potential FCA implications.

Last week marked the deadline for pharmaceutical and medical device manufacturers and group purchasing organizations (GPOs) to register with and submit aggregate 2013 payment and investment interest data to the Centers for Medicare & Medicaid Services (CMS) on certain financial relationships between themselves and physicians and teaching hospitals, as required by the Physician Payment Sunshine Act.1 In May, manufacturers and GPOs will be required to submit to CMS detailed 2013 payment data. With some exceptions, CMS will be making these data public by September 1, 2014. While the publicly available data are intended to provide more transparency for patients – to allow them to have a better understanding of the financial relationships between physicians and pharmaceutical and medical device companies – patients will certainly not be the only group interested in this public information. The Department of Health and Human Services (HHS) Office of the Inspector General (OIG), Department of Justice (DOJ), and relators’ attorneys will likely utilize these data to initiate investigations and support complaints under the federal False Claims Act (FCA). As with the recent release of the 2012 Medicare Part B Physician Fee Schedule data, members of the media will likely make inferences about certain financial relationships.

The U.S. government recovered $3.8 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2013.2 Fiscal 2014 looks to be a record-breaking year, with ever-increasing civil settlements by major pharmaceutical companies.3

As the reporting deadlines approach, it is worth considering an interesting, and largely unknown, potential implication of the public availability of these data: How will it affect future FCA litigation? The publically available Sunshine Act data could become relevant to FCA litigation in a variety of ways; two in particular are discussed below.

Anti-Kickback Statute Violations

The data could give rise to suspicions of violations of the federal Anti-kickback Statute (AKS). The AKS makes it a criminal offense to knowingly and willfully offer or pay remuneration to induce the referral of, or arrange for the provisions of, federal health care program business.4 In other words, the law prohibits any person or entity from giving, receiving – or offering to give or receive – anything of value in return for or to induce referrals for businesses covered by Medicare, Medicaid, or any other federally funded health care program. Violators of the AKS face imprisonment, criminal, and civil fines, as well as exclusion from federal health care programs.5

It is easy to see how publishing information regarding payments from pharmaceutical and medical device manufacturers to physicians and teaching hospitals could implicate the AKS, and by extension, the FCA. The Patient Protection and Affordable Care Act (ACA) made explicit that violations of the AKS are also violations of the FCA.6 Any payment from a pharmaceutical or medical device manufacturer to a physician who prescribes a product manufactured by the company providing the payment could be viewed as potentially inappropriate remuneration intended to influence prescribing behavior.

Off-Label Promotion

Publically available information reported as a result of the Sunshine Act may also have off-label promotion implications. Notably, reports to CMS must include the name of the drug or the type of device that forms the basis of the payment.7 Tying the payment to a particular drug or type of device could raise suspicions of off-label promotion. A pharmaceutical or medical device manufacturer that promotes its products for uses for which the product has not yet been approved by the United States Food and Drug Administration (FDA), i.e., off-label uses, is at risk of FCA liability. A false claim can arise when a manufacturer promotes a product for off-label, non-covered uses (that is, for a use that both has not been approved by FDA and is not covered by the federal health care programs). Payments going to physicians who specialize in an area that is outside the scope of a pharmaceutical or medical device’s approved indication could necessarily raise suspicions that the manufacturer is promoting the product for unapproved uses.

Potential Limits

Besides the risk of government identifying potential issues for further investigation and prosecution as a result of reported Sunshine Act data, private parties may also mine the publically available data. One substantial impediment to relators’ attorneys using Physician Sunshine Payment data in FCA litigation is the limitation that publicly available data cannot form the basis of a whistleblower claim.8 This is known as the public disclosure bar, although the effectiveness of this defense has been diminished with recent FCA amendments.

That said, the Sunshine Act data, even if not the basis of a claim, could nonetheless impact the litigation in many ways. For example, it could provide additional evidence for the government to review in reaching its decision whether to intervene in a qui tam action. Both OIG and DOJ could review the data before it is publicly available to assist in the determination that a given matter warrants intervention. Additionally, the publicly available data – beyond providing flavor in support of an FCA claim and assisting with meeting the heightened pleading standard associated with fraud allegations9 – could be a potential mine for plaintiff attorneys to locate areas of focus. Relators’ attorneys will no doubt track the data to ascertain potential problem drugs or companies about which they can then dedicate efforts to uncovering fraud and abuse in the federal health care system.

Going Forward

It remains to be seen how all of these risks will play out going forward. Courts will have to decide how these new data will fit into FCA litigation. OIG and DOJ will have to determine how much to rely on the new information. And relators’ attorneys will need to make decisions about how many resources to dedicate to mining the Sunshine Act data.

One potential consequence that we are already starting to see occur is that pharmaceutical and medical device manufacturers may halt or limit payments to physicians, and/or that physicians themselves will be reluctant to accept such payments, e.g., for research, for expenses associated with training on a device, and the like. Companies may decide to do so for a variety of reasons, including avoiding the administrative burdens associated with tracking and reporting such payments for purposes of the Sunshine Act, fear of FCA litigation, or for public relations reasons. Many physicians simply do not want their names publicized. It remains to be seen how these trends will evolve.
 

1 42 C.F.R. § 403.908(a).
2 DOJ Press Release, available at: http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html. 3 See, e.g., DOJ Press Release, available at: http://www.justice.gov/opa/pr/2013/November/13-ag-1170.html.
4 42 U.S.C. § 1320a-7.
5 Id.
6 42 U.S.C. § 1320a-7b(g). Note that manufacturers may submit “assumptions documents” as part of Sunshine reporting. Although CMS stated in the preamble to the Sunshine regulations its belief that the contents of such documents “should not be made public,” it acknowledged that it could provide access to the documents during an audit or investigation by other HHS divisions, the Office of Inspector General, or the Department of Justice.
7 42 C.F.R. 403.94(c)(8).
8 31 U.S.C. § 3730(e)(4).
9 Fed. R. Civ. P. Rule 9(b).

OIG, GAO Reports Examine Round 1 Rebid of the Medicare DMEPOS Competitive Bidding Program

On April 8, 2014, the OIG and GAO each issued reports focusing on different aspects of the “Round 1 Rebid” of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. By way of background, under DMEPOS competitive bidding, only suppliers that are winning bidders, meet licensing and other standards, and enter into a contract with CMS may furnish selected categories of DMEPOS to Medicare beneficiaries in competitive bidding areas (CBAs), with very limited exceptions. Contract suppliers are paid based on the median of the winning suppliers’ bids in the CBA, rather than the DMEPOS fee schedule amount. The Round 1 Rebid was in effect for a 3-year period, from 2011 through 2013, involving nine DME product categories in nine CBAs. CMS subsequently “recompeted” contracts in the Round 1 areas (including additional products), with three-year contracts effective January 1, 2014. CMS also established a second round of bidding covering 100 CBAs, along with a national mail-order diabetic testing supplies competitive bidding program; those three-year contracts went into effect July 1, 2013.

The OIG report assesses CMS compliance with DMEPOS bidding rules in the Round 1 Rebid. The OIG concluded that CMS generally followed its competitive bidding program rules when it selected suppliers and computed single payment amounts for the Round 1 Rebid – although a number of CMS errors were identified. Specifically, the OIG conducted a review based on a random sample of 100 of the 3,011 established DMEPOS single payment amounts in the Round 1 Rebid Program and the selection process for 266 winning suppliers associated with the sampled payment amounts. The OIG determined that CMS followed all applicable requirements for 255 of the 266 winning suppliers, but nine winning suppliers did not meet financial documentation requirements, and CMS incorrectly used two suppliers in one single payment computation. While the OIG characterizes the overall effect on Medicare payments to suppliers as “immaterial,” the OIG estimates that CMS paid suppliers $34,000 less than they would have received without any errors (less than 0.1 percent of the $113 million paid under the Round 1 Rebid Program during the first 6 months of 2011). The OIG recommends that CMS: (1) follow its established program procedures and applicable federal requirements consistently in evaluating the financial documents of all suppliers, and (2) ensure that all bids of winning suppliers are included in the calculation of single payment amounts before offering contracts. CMS concurred with the recommendations, and pointed out that it has enhanced the financial review process to ensure that all reviewers are accountants or certified public accountants.  Looking ahead, the OIG will be conducting a similar analysis for Round 2 of competitive bidding; this analysis may include an analysis of CMS’s procedures for ensuring supplier compliance with applicable state licensure requirements (depending on the results of an ongoing limited scope review).

The GAO issued a broader review focusing on data from the second year of the Round 1 Rebid contracts, covering the Round 1 Rebid’s effects on Medicare beneficiaries, contract suppliers, and non-contract suppliers. Among other things, the GAO observed that:

  • The number of beneficiaries furnished DME items included in the competitive bidding program generally decreased more in CBAs than in demographically similar “comparator” areas. CMS suggests that such declines may be attributable to reduced inappropriate usage of DME and do not necessarily reflect beneficiary access issues. In fact, CMS stated in comments on the report that its “sophisticated real-time claims monitoring system has continuously found that beneficiary access to all necessary and appropriate competitive bid items has been preserved since the program began” – a conclusion generally disputed by industry.
  • A small number of contract suppliers generally had a large proportion of the market share in the nine competitive bidding areas.
  • The total number of DME suppliers and Medicare allowed charges decreased more in CBAs than in the comparator areas. For instance, the number of suppliers with Medicare allowed charge amounts of $2,500 or more per quarter decreased an average of 27% in the CBAs compared to 5% in the comparator areas.
  • The number of grandfathered suppliers had so diminished that CMS was no longer monitoring them after the second quarter of 2012.
  • The program did not appear to have adversely affected beneficiary access to covered items, although additional monitoring would be needed to monitor the impact of the national mail-order diabetic testing supplies program and Round 2.

HHS OIG Identifies "Top 25" Priorities

The OIG has released its “Compendium of Priority Recommendations,” which lists 25 priority issues for which the OIG has open recommendation and that, if implemented, would best protect the integrity of HHS programs. The 25 top priorities are as follows:

  • Medicare Policies and Payments: address wasteful Medicare policies and payment rates for clinical laboratories, hospitals, and hospices; improve controls to address improper Medicare billings by community mental health centers, home health agencies, and skilled nursing facilities; detect and recover improper Medicare payments for services to incarcerated, unlawfully present, or deceased individuals; maximize recovery of Medicare overpayments; improve monitoring and reconciliation of Medicare hospital outlier payments; ensure that Medicare Advantage Organizations are implementing programs to prevent and detect waste, fraud, and abuse; and improve controls to address questionable billing and prescribing practices for Part D prescription drugs.
  • Medicare Quality of Care and Safety Issues: address adverse events in hospital settings; improve care planning and discharge planning for beneficiaries in nursing home settings; address harm to patients, questionable resident hospitalizations, and inappropriate drug use in nursing homes; improve nursing home emergency preparedness and response; and ensure hospice compliance with Medicare conditions of participation.
  • Medicaid Program Policies and Payments: ensure that state claims and practices do not inappropriately inflate federal reimbursements; ensure that states prevent, detect, and recover improper payments and return the federal share of recoveries to the federal government; assist states to better align Medicaid drug reimbursements with pharmacy acquisition costs; ensure that Medicaid Information Systems are fully functional; and address Medicaid managed care fraud and abuse concerns.
  • Medicaid Quality of Care and Safety Issues: ensure that Medicaid home- and community-based care service providers comply with quality and safety requirements; and ensure that States improve utilization of preventive screening services for eligible children.
  • Oversight of Food Safety: improve oversight of dietary supplements; and improve oversight of food inspections and traceability.
  • HHS Grants and Contracts: improve oversight of grantee compliance, quality assurance, and conflicts of interest; and improve oversight of Medicare contractor performance and conflicts of interest.
  • HHS Financial Stewardship: reduce improper payments and fraud; and correct deficiencies found in financial statement audits.

Note that some of these recommendations would require additional authority or other legislative change.  

OIG Report: Questionable Billing for Medicare Electrodiagnostic Tests

The OIG has issued a report examining questionable Medicare billing for electrodiagnostic tests, which are used to evaluate patients who may have nerve damage and which the OIG has identified as an area vulnerable to fraud, waste, and abuse. According to the OIG, 4,901 physicians had questionable billing for Medicare electrodiagnostic tests in 2011, based on seven measures of questionable billing developed by the OIG (e.g., physicians with an unusually high percentage of electrodiagnostic test claims using modifier 59 or 25, physicians with an unusually high average number of miles between the physicians’ and beneficiaries’ locations, and physicians with an unusually high average number of electrodiagnostic test claims for the same beneficiary on the same day). These questionable claims totaled $139 million in 2011, with physicians in the New York, Los Angeles, and Houston areas having the highest total questionable billing. In response to these findings, the OIG recommend that CMS: increase its monitoring of billing for electrodiagnostic tests; provide additional guidance and education to physicians regarding electrodiagnostic tests, and take appropriate action regarding physicians identified as having inappropriate or questionable billing. 

OIG Faults CMS for Incorrect Medicare Payments for Hospital Clinic Visits

The OIG estimates that CMS made $7.5 million in incorrect Medicare payments to hospitals in 2010 and 2011 for outpatient clinic visits, in part because of errors in identifying patients as “new” versus “established.” According to the OIG, hospitals attributed the incorrect payments to clerical errors, staff not fully understanding Medicare billing requirements, reliance on codes selected by the physician, or billing systems that could not identify established patients. The OIG recommends that CMS work with the Medicare administrative contractors (MACs) to recover incorrect payments; provide additional guidance to hospitals on billing clinic visits for new or established patients; and instruct hospitals on the need for stronger compliance controls.

Older Entries

April 8, 2014 — OIG Recommends Adjustments to Medicare ESRD Drug Payment Policies

March 24, 2014 — OIG Recommends Expansion of CMS's Medicare Part B Drug Pricing Substitution Policy

March 20, 2014 — OIG Issues Annual Report on Medicaid Fraud Control Unit (MFCU) Activities

March 20, 2014 — OIG Highlights Diabetic Test Strip Cost, Compliance Concerns

March 4, 2014 — Obama Administration Cites Record-Breaking Health Fraud Recoveries under Joint DOJ-HHS Program

March 4, 2014 — OIG Assesses Adverse Events Among Medicare Beneficiaries in SNFs

March 4, 2014 — OIG Recommends Expanding the Medicare "DRG Window"

February 14, 2014 — OIG Examines 340B Program Contract Pharmacy Arrangements in Advance of HRSA Rules

February 13, 2014 — OIG Releases FY 2014 Work Plan

February 12, 2014 — Physician-Owned Distributor Update

January 30, 2014 — OIG Highlights Pitfalls of Inconsistent Local Medicare Coverage Policies

January 30, 2014 — OIG Finds Medicare Contractors Lax on Medicare Vulnerabilities Associated with EHR Use

January 20, 2014 — OIG Concludes OCR Slow to Enforce HIPAA Security Rule and Comply with Cybersecurity Requirements

January 7, 2014 — OIG Seeks Anti-Kickback Safe Harbor, Fraud-Alert Topic Proposals

January 7, 2014 — OIG Identifies Top HHS Management Challenges

January 7, 2014 — OIG Issues Fall 2013 Semiannual Report

January 7, 2014 — OIG Calls for Greater Scrutiny of Clinicians with High Cumulative Medicare Payments

January 7, 2014 — OIG Report Addresses Potential Hospital EHR Technology Vulnerabilities

December 27, 2013 — Final Rules Issued Extending Protections of Electronic Health Record Donations

November 25, 2013 — OIG Examines Medicare Acute Hospital Outlier Payments

November 14, 2013 — OIG Examines Inappropriate Medicare Payments on Behalf of Deceased or Unlawfully-Present Beneficiaries

October 30, 2013 — OIG Highlights Volume of Spinal Surgeries Tied to Physician-Owned Distributors (PODs)

October 11, 2013 — Device Manufacturer Files Challenge to OIG Special Fraud Alert on Physician-Owned Distributors

October 10, 2013 — Obama Administration Warns Consumers about Potential "Obamacare" Fraud

October 10, 2013 — OIG Assesses Growth in Medicare Ambulance Transport Utilization

October 10, 2013 — OIG Investigates Medicare Polysomnography (Sleep Testing) Billing

October 10, 2013 — OIG Report Examines Medicare Appeals Volumes and Timeliness

October 9, 2013 — Government Shutdown Update: Medicare Claims Processing Continues, but Other Key Functions on Hold

September 17, 2013 — OIG Call for Medicare Part B Drug Rebates Rejected by CMS

September 16, 2013 — OIG Report Examines Critical Access Hospital Qualifications

September 16, 2013 — OIG Reports Point States to Potential Medicaid DMEPOS Savings

September 16, 2013 — OIG Seeks Improvements to RAC Program, Enhanced CMS Efforts to Stop Improper Medicare Payments

September 16, 2013 — OIG Urges CMS Action on Medicaid Drug Pricing Changes in Preparation of ACA Enrollment Expansion

August 27, 2013 — Medicare Billing For Cancelled Elective Surgeries

August 27, 2013 — OIG Questions Hospital Use of Observational Stays

August 27, 2013 — OIG Examines Clinical Trial Data and Safety Monitoring Boards

July 29, 2013 — CMS Announces First Temporary Moratoria on HHA, Ambulance Supplier Enrollment in High-Risk Areas under ACA Authority

July 29, 2013 — OIG Self-Disclosure Protocol Submissions

June 27, 2013 — OIG Focuses on Inappropriate Prescribing of Medicare Part D Drugs

June 27, 2013 — OIG Report Calls for Reduced Medicare Lab Payments

June 11, 2013 — OIG Final Rule on Data Mining by State Medicaid Fraud Control Units

May 28, 2013 — OIG Report Examines High-Risk Compounded Sterile Preparations

May 14, 2013 — Updated OIG Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs

May 13, 2013 — OIG Publishes Updated Provider Self-Disclosure Protocol

April 25, 2013 — Proposed Rule Would Reward Medicare Fraud Tipsters up to $9.9 Million, Revise Medicare Provider Enrollment Regulations

April 16, 2013 — OIG Calls Medicare Supplier Surety Bonds "Underutilized" CMS Tool

April 15, 2013 — OIG Releases FY 2012 Medicaid Integrity Report

April 15, 2013 — OIG Identifies Gaps in Private Insurer Reporting to HealthCare.Gov Plan Finder Portal

April 12, 2013 — CMS, OIG Propose Extension of Electronic Health Record Donation Protections

March 27, 2013 — OIG Updates Guidelines for Evaluating State False Claims Acts

March 27, 2013 — OIG Special Fraud Alert Deems Physician-Owned Distributors (PODs) As "Inherently Suspect" Under Anti-Kickback Statute

March 13, 2013 — OIG Examines SNF Care Planning/Discharge Planning

March 13, 2013 — OIG Finds Some LTCHs Have Not Reported Co-Located Status

March 13, 2013 — CMS Plans to Include DME Infusion Drugs in Competitive Bidding in Response to OIG Findings

March 12, 2013 — OIG Calls for Stronger Conflict-of-Interest Oversight for Medicare Part D P&T Committees

March 12, 2013 — OIG Continues to Call on CMS to Implement Medicare Part B Drug Pricing Reforms

February 18, 2013 — FY 2012 Health Care Fraud and Abuse Control Program Report

January 30, 2013 — OIG Continues to Fault Efforts to Prevent Medicare Fraud in Community Mental Health Centers

January 30, 2013 — OIG Calls for Improvements to Medicare Parts C & D Benefit Integrity Activities

January 30, 2013 — OIG Assesses State Medicaid Third-Party Liability Collection

January 30, 2013 — Improper Medicare Payments for Unlawfully Present, Incarcerated Beneficiaries

January 14, 2013 — OIG Calls for Cuts in Medicare Rates for Back Orthoses

January 14, 2013 — OIG Finds DMEPOS Competitive Bidding Not Spurring Suppliers to Solicit Specific Brands/Modes of Delivery

January 14, 2013 — OIG Assesses Medicare Oversight of Home Health Agencies

January 14, 2013 — OIG Invites Proposals for Anti-Kickback Safe Harbors, Fraud-Alerts

January 11, 2013 — OIG Issues Medicare Part B Drug Pricing Report, Calls Out CMS Inaction on Reforms

December 19, 2012 — OIG Highlights Vulnerabilities in CMS Oversight of the Medicare EHR Incentive Program

December 17, 2012 — OIG Releases 2012 Compendium of Unimplemented Recommendations

December 17, 2012 — OIG Report on Medicare Part B Drug Pricing Data

November 29, 2012 — OIG Outlines Top HHS Management Challenges

November 29, 2012 — OIG Recommends Resurrection of Least Costly Alternative (LCA) Drug Policy

November 29, 2012 — OIG Calls for Improvements in Medicare Appeals Process

November 29, 2012 — OIG Finds Overwhelming Hospital Compliance with Present on Admission (POA) Indicator Reporting

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

November 14, 2012 — OIG Reviews Impact of DMEPOS Bidding Program on Billing for Diabetes Test Strips (DTS)

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

October 30, 2012 — OIG Calls on CMS to Implement Medicaid Drug AMP-Based FUL Payments

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 16, 2012 — OIG Report on Criminal Convictions of Nurse Aides with Substantiated Findings of Abuse, Neglect, & Misappropriation

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

October 15, 2012 — OIG Assesses Inappropriate Medicare Part D Payments for Schedule II Drugs Billed as Refills

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

October 15, 2012 — OIG Calls on CMS to Implement Safeguards for the Medicare Prosthetics/Orthotics Benefit

October 15, 2012 — OIG Examines Employment of Excluded Individuals by Medicaid Managed Care Entity Providers

October 15, 2012 — OIG Recommends Improvements to CMS Response to Health Information Breaches

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

September 27, 2012 — State Collection of Medicaid Rebates for Drugs Paid Through Medicaid MCOs

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 17, 2012 — OIG Reports on Questionable Medicare HHA Billing

July 31, 2012 — OIG Highlights Adverse Events in Hospitals

July 31, 2012 — OIG Examines CMS Reconciliation of Medicare Hospital Outlier Payments

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

June 27, 2012 — OIG, GAO Review Medicaid HCBS Programs

June 27, 2012 — OIG Faults DME MAC Review of High Utilization Claims for Diabetic Testing Supplies

June 27, 2012 — OIG Assesses Extent of Physician EHR Use

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

June 13, 2012 — OIG Concludes Part D Plans Include Drugs Used by Dual Eligibles

May 31, 2012 — OIG Releases Spring 2012 Semiannual Report