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.

OIG Recommends Adjustments to Medicare ESRD Drug Payment Policies

The OIG recently offered recommendations to CMS on how to update Medicare payments to end stage renal disease (ESRD) facilities for drugs used by dialysis patients. Based on a review of ESRD drug prices in the first quarter of 2012, the OIG concluded that independent dialysis facilities can purchase ESRD drugs for less than the levels provided in the ESRD base rate (9% below, in the aggregate), but average acquisition costs for hospital based dialysis facilities exceeded the reimbursement amounts (5% above, in the aggregate). Thus the OIG cautioned that any reductions to the ESRD base rate could potentially harm hospital-based dialysis facilities. While dialysis facilities’ average acquisition costs for the majority of drugs under review have decreased over the last 3 years, the average costs for epoetin alfa (which represented more than three-quarters of drug costs in responding facilities) have increased by at least 17%. The OIG also determined that the concluded that the Producer Price Index (PPI) for Prescription Drugs was not an accurate predictor of cost changes for most drugs under review. In addition to rebasing the ESRD base rate to reflect current trends in drug acquisition costs (as is required by law), the OIG recommends that CMS (1) distinguish payments in the ESRD base rate between independent and hospital-based dialysis facilities, and (2) consider updating the ESRD payment bundle using a factor that takes into account drug acquisition costs.

OIG Recommends Expansion of CMS's Medicare Part B Drug Pricing Substitution Policy

The OIG has issued a report, “Comparing Average Sales Prices and Average Manufacturer Prices for Medicare Part B Drugs: An Overview of 2012,” which assesses CMS’s use of its authority to lower reimbursement for Medicare Part B drugs when a drug’s average sales prices (ASP) exceeds its average manufacturer prices (AMP) or widely available market price (WAMP) by a threshold, currently set at 5%. In April 2013, CMS began exercising its payment substitution authority, which currently applies only to certain codes with complete AMP data, and when the ASP for the code exceeds the 5% threshold in two consecutive quarters. The OIG estimates that CMS has generated more than $800,000 in savings under this policy, but the agency could achieve greater savings by expanding the circumstances under which it exercises its substitution authority to include drug codes with complete AMP data in a single quarter and drug codes with partial AMP data. CMS did not concur with these recommendations.

OIG Issues Annual Report on Medicaid Fraud Control Unit (MFCU) Activities

The OIG has released its Medicaid Fraud Control Units Fiscal Year 2013 Annual Report, which highlights achievements from the investigations and prosecutions conducted by the 50 MFCUs along with related OIG oversight activities. In FY 2013, MFCUs nationwide reported a total of 1,341 criminal convictions in cases involving Medicaid fraud and patient abuse and neglect, and nearly $1 billion in criminal recoveries. Criminal convictions involved a variety of provider types, most notably home health agencies. MFCUs also obtained 879 civil settlements and judgments in FY 2013. Civil recoveries totaled over $1.5 billion, with cases involving a variety of provider types, particularly pharmaceutical companies. More than 1,000 Medicaid providers convicted in MFCU cases were excluded from federal health care programs by the OIG in FY 2013. The OIG notes that a lack of fraud referrals to MFCUs from Medicaid managed care organizations (MCOs) presents challenges, and MCFU officials expressed concern that some MCOs may not have incentive to refer providers suspected of fraud. The OIG also determined that ACA provider payment suspension rules require more coordination between MFCUs and State Medicaid agencies.

OIG Highlights Diabetic Test Strip Cost, Compliance Concerns

On March 18, 2014, the OIG issued a report entitled “State Medicaid Agencies Can Significantly Reduce Medicaid Costs for Diabetic Test Strips.” The OIG highlighted examples of states that have saved millions of dollars through the use of rebates on blood glucose test strips. The OIG also estimated potential savings for state Medicaid agencies if they adopt competitive bidding for these supplies, or if they obtained pricing comparable to pricing under Medicare’s national mail-order competition for diabetic supplies. The OIG recommends that CMS work with state Medicaid agencies to determine whether the use of manufacturer rebates and lower provider reimbursement rates could achieve net savings for the purchase of blood glucose test strips. The OIG also has created a “spotlight” page to highlight fraud and waste associated with diabetes test strips, noting previous OIG action in this area, including special fraud alerts, enforcement actions, and inspection reports.

Obama Administration Cites Record-Breaking Health Fraud Recoveries under Joint DOJ-HHS Program

According to the latest Health Care Fraud and Abuse Control Program (HCFAC) Annual Report, federal health care fraud prevention and enforcement efforts resulted in the recovery of a record $4.3 billion in FY 2013, up from $4.2 billion in FY 2012. In announcing detailed enforcement achievements, the Administration cites new ACA authorities – including enhanced provider screening requirements, limited enrollment moratoria, and authority to suspend Medicare payments during pending investigations -- that have improved the government’s ability to clamp down on health care fraud. The report also notes the successes of coordinated Department of Justice (DOJ) and HHS efforts such as the Health Care Fraud Prevention & Enforcement Action Team (HEAT) and interagency Medicare Fraud Strike Force teams.

OIG Assesses Adverse Events Among Medicare Beneficiaries in SNFs

The OIG released a report on March 3, 2014, “Adverse Events in Skilled Nursing Facilities: National Incidence among Medicare Beneficiaries,” that examines the national incidence rate, preventability, and cost of adverse events in skilled nursing facilities (SNFs). This report is an outgrowth of a series of studies about hospital adverse events. For purposes of this report, the OIG defined an adverse event as harm to a patient or resident as a result of medical care in a health care setting that resulted in a prolonged SNF stay or hospitalization (including emergency room visit), permanent harm, life-sustaining intervention, or death. Based on a small sample of individuals discharged from hospitals to SNFs with SNF stays that ended in August 2011 (a total of 653 Medicare beneficiaries), the OIG estimates that 22% of Medicare beneficiaries experienced adverse events during their SNF stays and 11% of Medicare beneficiaries experienced temporary harm events during their SNF stays. The OIG’s physician reviewers determined, based on review of the patients’ medical record, that 59% of these adverse events and temporary harm events were clearly or likely preventable. More than half of the residents who experienced harm were rehospitalized, with an estimated Medicare cost of $208 million in August 2011. This equates to $2.8 billion spent on hospital treatment for harm caused in SNFs in FY 2011 (or roughly 2% of inpatient hospital spending).

The OIG observes that the preventable nature of many of the events it identified indicates an opportunity for SNFs to significantly reduce the incidence of resident harm events. To that end, the OIG recommends that the Agency for Healthcare Research and Quality (AHRQ) and CMS raise awareness of nursing home safety and reduce resident harm through methods the agencies previously used to promote hospital safety. For instance, OIG recommends that the agencies collaborate to create and promote a list of potentially reportable nursing home events to help nursing home staff better recognize and reduce harm (but AHRQ and CMS should specify that they do not require external nursing home reporting of these events). Likewise, the OIG recommends that AHRQ and CMS encourage nursing homes to report adverse events to Patient Safety Organizations. CMS also should include potential events and information about resident harm in future guidance to nursing homes on the development of Quality Assurance and Performance Improvement (QAPI) programs pursuant to the ACA. Finally, the OIG recommends that CMS instruct state agency nursing home surveyors to review facility practices intended to identify and reduce adverse events. AHRQ and CMS concurred with the OIG’s recommendations.

OIG Recommends Expanding the Medicare "DRG Window"

A recent HHS Office of Inspector General (OIG) report examines Medicare services provided during the Medicare Severity Diagnosis Related Group (DRG) payment window – that is, the period when certain outpatient services related to an inpatient admission are considered to be included in the DRG payment. Currently, outpatient services delivered within three days of an inpatient admission in a setting owned by the admitting hospital are included in the DRG payment. On the other hand, the OIG notes that services provided by hospitals that share a common owner (i.e., multiple hospitals owned by the same corporation) are not subject to the DRG window. The OIG estimated that Medicare payments for outpatient services provided at settings owned by admitting hospitals in the 11 days prior to the DRG window totaled $263 million in 2011. The Medicare program also paid an estimated $45 million in 2011 for outpatient services provided at hospitals affiliated with, but not owned by, admitting hospitals during the three days prior to inpatient admissions. The OIG recommends that CMS seek legislative authority to (1) expand the “DRG window” to include additional days prior to the inpatient admission (the OIG does not specify the number of days), and (2) expand the DRG window to include other hospital ownership arrangements, such as affiliated hospital groups. CMS did not concur with either recommendation, noting that they have not been proposed by the President and observing that they would require legislation.

OIG Examines 340B Program Contract Pharmacy Arrangements in Advance of HRSA Rules

A recent OIG report examined potential problems associated with the growing use of contract pharmacies under the 340B discount drug program. The OIG describes these arrangements as when a 340B covered entity, such as a community health center or disproportionate share hospital, contracts with a pharmacy to dispense drugs purchased through the 340B program on the entity’s behalf. In short, based on interviews with covered entities and 340B administrators, the OIG found that some contract pharmacy arrangements create inconsistencies with regard to which prescriptions are treated as 340B eligible. Contract pharmacies also may not make necessary arrangements to prevent duplicate discounts (when a drug manufacturer pays a Medicaid drug rebate program on a drug sold at the already-discounted 340B price). The OIG also found that most covered entities it reviewed did not conduct all of the oversight activities recommended by the Health Resources and Services Administration (HRSA). In discussing its findings, the OIG stated that it was not making recommendations since HRSA has announced plans to propose new regulations for the 340B program this year the OIG’s results are intended to inform HRSA’s efforts. The OIG also intends to continue monitoring the issue.

OIG Releases FY 2014 Work Plan

The OIG has posted its FY 2014 Work Plan, which lists the various audit, inspection, and investigative initiatives that the OIG intends to conduct in the coming year. The OIG plans reviews of reimbursement and program integrity policies throughout the Medicare and Medicaid programs, with a particular focus on Medicare inpatient hospital care and Medicare and Medicaid prescription drug policies. The Work Plan also includes numerous reviews involving other HHS agencies, including the Centers for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health. In addition, the Work Plan includes a description of the OIG’s legal and investigative activities related to Medicare and Medicaid.

Physician-Owned Distributor Update

Our sister blog, Life Sciences Legal Update, reports on recent developments involving the Office of the Inspector General (OIG) scrutiny of physician-owned distributors, including the disposition of a device manufacturer's challenge to a related OIG Fraud Alert.

OIG Highlights Pitfalls of Inconsistent Local Medicare Coverage Policies

Inconsistent Medicare Part B local coverage determinations (LCDs) create disparities in Medicare beneficiary access to items and services, a recent OIG report concludes. The OIG focused on LCDs issued by MACs for Part B items and services performed by noninstitutional providers (e.g., medical procedures, evaluation and management services, imaging services, drugs, and tests), but excluded LCDs for durable medical equipment. Among other things, the OIG observed that as of October 2011, over half of the 7,500 Part B procedure codes reviewed were subject to an LCD in one or more states – but LCDs affected coverage for over 50% of codes in some states but as few as 5% in other states. These LCDs limited coverage for these items and services differently across the states, and defined similar clinical topics inconsistently. The OIG observes that while MACs may have developed LCDs for particular procedure codes to address local situations, including overuse or misuse of items or services, as a result “beneficiaries’ access to items and services can depend on geography as much as their clinical indications.”  One third of the codes reviewed that were subject to a noncoverage LCD involved new technologies.  The OIG recommends that CMS: establish a plan to evaluate new LCD topics for national coverage; continue efforts to increase consistency among existing LCDs; and consider requiring MACs to jointly develop a single set of coverage policies. CMS generally agreed with the OIG on the benefits of achieving greater LCD consistency, although CMS noted that there were hurdles associated with requiring joint development of policies (ranging from administrative burdens, beneficiary appeals rights, and state scope of practice laws).

OIG Finds Medicare Contractors Lax on Medicare Vulnerabilities Associated with EHR Use

The OIG has issued a report entitled “CMS and Its Contractors Have Adopted Few Program Integrity Practices to Address Vulnerabilities in EHRs,” which concluded that few Medicare contractors were reviewing EHRs differently from paper medical records, and not all contractors reported being able to determine whether a provider had copied language or over-documented in a medical record. The OIG recommends that CMS provide guidance to its contractors on detecting fraud associated with EHRs, including specific guidance addressing EHR documentation and electronic signatures in EHRs. The OIG also suggested that CMS should direct its contractors to use providers’ audit logs, which distinguish EHRs from paper medical records and could be valuable to CMS’s contractors when reviewing medical records.

OIG Concludes OCR Slow to Enforce HIPAA Security Rule and Comply with Cybersecurity Requirements

The OIG has concluded that the HHS Office for Civil Rights (OCR) is not adequately overseeing and enforcing the HIPAA Security Rule. In short, the OIG found that OCR failed to provide for periodic audits, as mandated by HITECH, to ensure that covered entities were in compliance with the Security Rule, and instead continued to follow the complaint-driven approach to assess Security Rule compliance. OCR also failed to consistently follow its investigation procedures and maintain documentation needed to support key decisions made during investigations conducted in response to reported violations of the Security Rule. The report findings and recommendations are discussed in a posting on our Life Sciences Legal Update blog.

OIG Seeks Anti-Kickback Safe Harbor, Fraud-Alert Topic Proposals

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has published its annual solicitation of recommendations for new or modified safe harbor provisions under the federal anti-kickback statute, as well as potential topics for new OIG Special Fraud Alerts.  Comments will be accepted until February 25, 2014. For a status report on prior public safe harbor recommendations, see Appendix F of the OIG's Fall 2013 Semiannual Report to Congress.

OIG Identifies Top HHS Management Challenges

The OIG has issued its latest list of top management and performance challenges facing HHS, reflecting “continuing vulnerabilities that OIG has identified for HHS over recent years as well as new and emerging issues that HHS will face in the coming year.”  This year’s list includes the following challenges: (1) Overseeing the Health Insurance Marketplaces; (2) Transitioning to Value-Based Payments for Heath Care; (3) Ensuring Appropriate Use of Prescription Drugs in Medicare and Medicaid; (4) Protecting the Integrity of an Expanding Medicaid Program; (5) Fighting Fraud and Waste in Medicare Parts A & B; (6) Preventing Improper Payments and Fraud in Medicare Advantage; (7) Ensuring Quality of Care in Nursing Facilities and Home and Community-Based Settings; (8) Effectively Using Data and Technology to Protect Program Integrity; (9) Protecting HHS Grants and Contract Funds from Fraud, Waste, and Abuse; and (10) Ensuring the Safety of Food, Drugs, and Medical Devices.

Older Entries

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

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

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

May 14, 2012 — Medicare Payment for Vision-Loss Drugs Reviewed by OIG

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

April 23, 2012 — OIG Examines Nursing Home Emergency Preparedness

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

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 — Quality Assurance, Care at HRSA-Funded Health Centers Reviewed

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

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

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