According to a recent OIG report, "Incorrect Place-of-Service Coding Resulted in Potential Medicare Overpayments Costing Millions,” physicians did not always correctly code the place of service on Part B claims. This resulted in potential overpayments of approximately $33.4 million for services provided from January 2010 through September 2012. The OIG explains that physicians performed these services in facility locations, but physicians incorrectly coded the services as performed in higher-paying nonfacility locations. The OIG attributes these overpayments to physician internal control weaknesses and insufficient contractor postpayment reviews. The OIG therefore recommends that CMS direct its Medicare contractors to recover identified overpayments, educate physicians and billing personnel on the importance of internal controls to ensure correct place-of-service coding, and expand data matches to identify potentially miscoded claims. CMS concurred with the recommendations.
In response to a Congressional request, the OIG has reviewed the extent to which home health agencies (HHAs) have employed individuals with criminal convictions and whether state requirements should have disqualified such individuals from HHA employment. The OIG points out that there are no federal requirements that HHAs conduct background checks on employees, and state requirements vary. The OIG conducted an analysis of a sample of Medicare-certified HHAs and the individuals they employed as of January 1, 2014. All HHAs reviewed conducted background checks of varying types on their prospective employees, and about half also conducted periodic rechecks after hiring. The OIG found that 4% of HHA employees had at least one criminal conviction, but FBI criminal history records were not detailed enough to enable the OIG to determine whether all of the employees should have been disqualified. The OIG recommend that CMS promote minimum standards in HHA employee background check procedures by encouraging more states to participate in the National Background Check Program; CMS concurred.
The OIG has issued an “Early Alert” warning regarding the use of federal funding by state-based marketplaces under the Affordable Care Act (ACA). The OIG notes that the ACA clearly prohibits marketplaces from using grant funds to support ongoing operations after January 1, 2015. The OIG expresses its “concerns that, without more detailed guidance from CMS, state-based marketplaces (SBMs) might have used, and might continue to use, establishment grant funds for operating expenses after January 1, 2015, contrary to law.” The OIG recommends that CMS consider establishing clear guidance on what constitutes (1) operational costs and (2) design, development, and implementation costs to minimize the marketplaces' improper use of establishment grant funding for operational expenses after January 1, 2015. In developing this guidance, the OIG encourages CMS to review SBM plans for using establishment grant funds to ensure that the guidance addresses real-world examples (e.g., call centers, in-person assisters, bank fees, and printing and postage expenses). Finally, the OIG encourages CMS to monitor SBMs' use or potential use of establishment grant funds for operational costs and take appropriate action.
OIG Partners with Industry Associations by Issuing Practical Guidance for Health Care Governing Boards on Compliance Oversight
On April 20, 2015, the Office of the Inspector General of the Department of Health and Human Services (“OIG”) released educational guidance designed to assist governing boards of health care organizations (“Boards”) in their compliance oversight functions. This guidance, entitled “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (the “Guidance”), was developed in a collaborative effort among the OIG, the Association of Healthcare Internal Auditors (“AHIA”), the American Health Lawyers Association (“AHLA”), and the Health Care Compliance Association (“HCCA”).
The Guidance updates previous guidance issued by OIG and AHLA, and incorporates insight from the AHIA and HCCA to help assist the internal auditors, compliance officers, and lawyers that report to the Boards. The document addresses four key issues relating to a Board’s oversight and review of compliance program functions: (1) the roles and relationships among an organization’s audit, compliance, and legal departments; (2) the mechanisms and processes for reporting to the Board; (3) identifying and auditing regulatory risk; and (4) methods to encourage organization-wide accountability for achieving compliance goals and objectives.
Complementing the previous guidance issued by OIG and AHLA, the Guidance provides some practical suggestions for and expectations of Boards when implementing their oversight compliance programs. Boards have a duty to act in good faith in exercising their oversight function to ensure that the organization has a corporate reporting system that is adequate to ensure that appropriate information relating to compliance and applicable law comes to the Board’s attention in a timely manner as a matter of course. Specifically, the Guidance suggests that Boards should not take a “one size fits all” approach to compliance, given the varying sizes and complexity of their organizations. Rather, Boards should take into account the differing regulatory landscapes and operating environments in which they operate, and should continue to raise the bar by adding regulatory and compliance experts to their Boards. The Guidance also suggests that Boards should develop a formal plan to stay abreast of the ever-changing regulatory landscape – clearly a challenge for all health care organizations that are subject to an increasing array of regulatory requirements.
In an in-depth discussion of the roles and relationships of the audit, compliance, and legal departments of an organization, the Guidance reinforces the proposition that compliance is an enterprise-wide function, not simply a function of one department within the organization. The Guidance illustrates that while some compliance approaches may set specific boundaries, other approaches should focus on cooperation and collaboration between the relevant departments of an organization. Regardless of the approach, however, the OIG reiterates its position that the compliance and legal functions should remain independent—in addition to internal audit, human resources, and quality improvement. Additionally, the Guidance provides that when overseeing compliance programs, Boards should be aware of how the management of an organization approaches conflicts and disagreements when resolving compliance issues.
The Guidance further discusses processes for identifying and auditing potential risk areas common to all health care providers, how Boards can employ existing industry tools to address risk areas, and methods for ensuring that organizations constantly review and audit risk areas. Among other things, the OIG suggests that Boards should receive regular reports regarding an organization’s risk mitigation and compliance efforts.
The Guidance also focuses on building incentives into compliance programs to encourage self-identification of compliance issues and voluntary self-reporting of compliance “failures.” The Guidance provides the example of the so-called 60-Day Rule, which requires providers enrolled in the Medicare and Medicaid programs to report and refund known overpayments within 60 days from the date when the overpayment is “identified” or within 60 days from the date when any corresponding cost report is due. While acknowledging that there are still no final rules to guide Boards or health care organizations on what it means to “identify” an overpayment, the Guidance suggests that Boards ask management about its efforts to develop policies for identifying and returning overpayments in anticipation of this rule and, more broadly, how the organization is correcting compliance issues. In addition, the Guidance emphasizes that health care organizations need to monitor new developments and ensure that the organization is taking appropriate steps to comply and reduce enterprise risk.
In advancing the overarching theme that compliance is an enterprise-wide responsibility, the Guidance emphasizes that it should not be construed as setting a particular standard of conduct. Nonetheless, the document emphasizes that “every Board is responsible for ensuring that its organization complies with relevant federal, state, and local laws.” In closing, the Guidance underscores that while there is no uniform approach to compliance, Boards should continuously make their best efforts to increase their knowledge of emerging risks and to encourage a level of compliance accountability on an organization-wide basis.
The Guidance notes that large and small organizations must demonstrate equal levels of commitment to ethical conduct and compliance, even if they have differing levels of resources available to do so. Given this, and in light of the increasing number of Corporate Integrity Agreements in which the OIG requires specific compliance attention and activity by Boards of Directors, large and small organizations alike would do well to build a compliance role into their Board activities.
The OIG has released its Medicaid Fraud Control Units (MFCU) Fiscal Year 2014 Annual Report, which highlights statistical achievements of the 50 MFCUs nationwide, along with related OIG oversight activities. With regard to criminal cases, the report notes:
- MFCUs reported 1,318 criminal convictions, most frequently involving home health care aides, certified nursing aides, and other medical support;
- Three-quarters of MFCU criminal convictions were for fraud; and
- MFCU recoveries from criminal cases in FY 2014 reached nearly $300 million.
With regard to civil cases, the report explains:
- MFCUs reported 874 civil settlements and judgments, with 52 percent of cases involving pharmaceutical companies;
- Two-thirds of MFCU civil settlements and judgments were global settlements (civil false claims cases brought by the U.S. Department of Justice involving a group of State MFCUs); and
- FY 2014 recoveries from civil cases totaled $1.7 billion; recoveries from global cases accounted for 69 percent of these recoveries.
In addition, the OIG excluded 1,337 providers from federal health programs in FY 2014 as a result of MFCU investigations, prosecutions, and convictions.
According to the FY 2014 HCFAC program report, more than $3.3 billion was recovered in FY 2014 as a result of the government’s health care fraud judgments and settlements, including $2.3 billion won or negotiated by the federal government in FY 2014. Since the HCFAC program began in 1997, it has returned more than $27.8 billion to the Medicare Trust Funds. In FY 2014, the Department of Justice (DOJ) opened 924 new criminal health care fraud investigations, with criminal charges filed in 496 cases and 734 defendants convicted of health care fraud-related crimes. The report also notes that the Federal Bureau of Investigation efforts led to “the dismantlement of the criminal hierarchy of more than 142 health care fraud criminal enterprises.” With regard to civil cases, DOJ opened 782 new civil health care fraud investigations and had 957 civil health care fraud cases pending at the end of the year.
In addition, HHS Office of Inspector General (OIG) investigations resulted in 867 criminal actions related to Medicare and Medicaid and 529 civil actions (e.g., false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters). The OIG also excluded more than 4,000 individuals and entities from participation in Medicare, Medicaid, and other federal health care programs for criminal convictions for crimes related to these programs, patient abuse or neglect, or as a result of licensure revocations.
Beyond enforcement activities, the annual report discusses CMS preventive measures to combat health program fraud and abuse, including enhanced screening provisions that have resulted in deactivation of 470,000 enrollments and revocation of 28,000 enrollments. CMS also has continued the temporary moratoria on the enrollment of new home health or ambulance service providers in specific geographic locations and applied advanced analytics to Medicare fee-for-service claims to identify and suspicious billing patterns, among other initiatives.
The OIG has released its March 2015 “Compendium of Unimplemented Recommendations,” which highlights the OIG’s top 25 recommendations for cost savings and/or quality improvements in HHS programs, along with other significant unimplemented recommendations. High-priority recommendations address the following areas, among others:
- Payment Policies and Practices: Expand the DRG window to include additional days prior to the inpatient admission and other hospital ownership arrangements; establish a hospital transfer payment policy for early discharges to hospice care; and reduce hospital outpatient department payment rates for ambulatory surgical center-approved procedures.
- Billing and Payment: Develop oversight mechanisms for the home health face-to-face requirement; change the method for determining how much therapy is needed to ensure appropriate skilled nursing facility payments; detect and recoup improper Medicare payments made for services rendered to incarcerated beneficiaries; implement an automated system to recalculate outlier claims to facilitate reconciliations; and provide states with definitive guidance for calculating the federal upper payment limit (UPL), including using facility-specific UPLs that are based on actual cost report data.
- Contractor Oversight: Utilize and report Zone Program Integrity Contractors’ (ZPICs') workload statistics in ZPIC evaluations.
- Grants and Contracts: The National Institutes of Health (NIH) should promulgate regulations addressing institutional financial conflict of interest.
- Program and Financial Management: Reduce significant variation in states’ personal care services laws and regulations; and standardize administrative law judge level case files and make them electronic.
- Quality of Care and Safety: Broaden patient safety efforts to include all types of adverse events; require states to report on vision and hearing screening data; strengthen oversight of state access standards for Medicaid managed care; and expand regulatory authority and oversight of dietary supplements.
- Emergency Preparedness: Establish effective hospital emergency preparedness and response policies.
- Health Information Technology: Improve the Transformed Medicaid Statistical Information System; and address fraud vulnerabilities in EHRs.
- Program Integrity: Increase reviews of clinicians associated with high cumulative payments; and restrict certain beneficiaries to a limited number of pharmacies or prescribers.
- Affordable Care Act: Improve internal CMS controls related to determining applicants’ eligibility for enrollment in quality health plans and eligibility for insurance affordability programs.
While some of these recommendations could be achieved administratively, other policies would require legislative changes to implement.
The HHS Office of Inspector General (OIG) has released detailed statistical data on MFCU enforcement actions, recoveries, and expenditures for fiscal year 2014. Overall, state MFCUs reported more than $2 billion in criminal and civil recoveries (settlements, judgments, or prefiling settlements) in FY 2014, more than $1.7 billion of which were civil recoveries. The states also had a total of 16,464 open fraud or abuse/neglect investigations at the end of FY 2014, and they reported 1,318 convictions and 874 civil settlements and judgments during the year. State-specific data also is available in interactive map form.
A recent OIG report examines increasing use of CAH “swing-bed” services, which the OIG describes as being equivalent to services performed at a SNF, but which are reimbursed at 101% of a CAH’s reasonable cost rather than at the Medicare SNF PPS rate. The OIG estimates that Medicare could have saved $4.1 billion over six years if payments for swing-bed services at CAHs were made using SNF PPS rates, and OIG recommends that CMS seek legislation to tie CAH swing-bed reimbursement rates to SNF PPS rates. CMS disagreed with these recommendations, stating that the OIG’s methodology overestimated potential savings. Nevertheless, CMS concurs that changes should be made to CAH designation and payment policies to “balance beneficiary access to care while promoting payment efficiency.” CMS pointed to provisions of the President's fiscal year 2015 budget proposal that would reduce CAH payments from 101% to 100% of reasonable costs and modify eligibility rules. For more information, see the full report, “Medicare Could Have Saved Billions at Critical Access Hospitals If Swing-Bed Services Were Reimbursed Using the Skilled Nursing Facility Prospective Payment System Rates.”
On February 24, 2015, the HHS Office of Inspector General (OIG) released its “Health Reform Oversight Plan” for FY 2015, which describes the OIG’s current and planned efforts to oversee the implementation and management of HHS programs under the ACA. The plan outlines the OIG’s key tactical considerations (e.g., assessing relative risks; monitoring emerging issues and trends, conducting reviews, and addressing allegations of fraud); identifies primary focus areas, both in the health insurance Marketplaces and in other ACA-related HHS programs; and sets forth target timeframes for issuing reports on reviews related to the Marketplaces. While the report focuses on audits and evaluations, the OIG notes that it is prepared for and engaged in law enforcement operations related to ACA programs.
The OIG has issued another report examining the safety of compounded sterile preparations (CSPs) used in hospitals, in response to a 2012 meningitis outbreak caused by contaminated injections. This report, "Medicare’s Oversight of Compounded Pharmaceuticals Used in Hospitals," assesses the extent to which Medicare's oversight of hospitals addresses 55 practices for CSP oversight in acute-care hospitals recommended by various expert guidelines. While CMS and the four CMS-approved hospital accreditors addressed most of the recommended CSP-related practices at least some of the time, the OIG identified certain gaps, particularly with regard to review of hospital contracts with stand-alone compounding pharmacies. The OIG also questioned the human capital available by oversight entities to thoroughly review hospitals' preparation and use of CSPs, and the adequacy of surveyor training related to compounding. The OIG recommends that CMS: (1) ensure that hospital surveyors receive training on standards from nationally recognized organizations related to safe compounding practices; and (2) amend its interpretive guidelines to address hospitals' contracts with standalone compounding pharmacies. CMS concurred with the recommendations.
OIG Report: Medicare Payments for Power Mobility Device Claims that Did Not Meet Physician Face-To-Face Exam Rules
As a condition of Medicare coverage for power mobility devices (PMDs), a physician must conduct and document a face-to-face examination of the beneficiary and write a prescription for the PMD. CMS established an optional Healthcare Common Procedure Coding System (HCPCS) code, G0372, for a physician to report the need for a PMD. Based on a review of a limited sample of claims (200 total), the OIG determined that while PMD claims with a corresponding physician G-code claim generally conformed with requirements for face-to-face examinations of beneficiaries, almost half of the 100 PMD claims without a corresponding physician G-code claim did not meet the face-to-face examination requirement. On the basis of its sample results, the OIG estimates that Medicare paid approximately $35.2 million in 2010 for PMD claims that did not meet federal requirements. The OIG recommends that CMS, among other things, adjust the sampled claims representing overpayments to the extent allowable; require physicians to use the G0372 code when prescribing PMDs; and educate physicians on the use of the G0372 code and the documentation requirements for face-to-face examinations. The report, “Medicare Paid Suppliers for Power Mobility Device Claims That Did Not Meet Federal Requirements for Physicians' Face-to-Face Examinations of Beneficiaries,” is available at http://oig.hhs.gov/oas/reports/region9/91202068.pdf.
The HHS Office of Inspector General (OIG) estimates that CMS made $4.6 million in incorrect Medicare outpatient payments to hospitals for established patients’ clinic visits in 2012. According to the OIG, hospitals attributed the incorrect payments to staff making clerical and programing errors, not verifying whether the patient was registered as an inpatient or outpatient of the hospital within the past 3 years (and thus considered an established rather than new patient), not following hospital procedures, not fully understanding Medicare billing requirements for clinic visits, and relying on the code that the treating physician billed for that visit. The OIG also observes that CMS does not have edits in place to identify Medicare payments for patients who were already registered at a facility. The OIG recommends that CMS work with its Medicare administrative contractors to recover identified incorrect payments and resolve additional potential overpayments to the extent feasible. For more information, see the full report, “CMS Did Not Always Correctly Make Clinic Visit Payments to Hospitals During Calendar Year 2012.”
The OIG recently issued a report that examined the extent to which Quality Improvement Organizations (QIOs) duplicate other CMS hospital quality improvement efforts, particularly Hospital Engagement Networks (HENs) and the Community-Based Care Transitions Program (CCTP). Based on a questionnaire sent to a random sample of 410 Medicare hospitals, more than half of responding hospitals reported that that they participated with QIOs on quality improvement projects in 2013, but the majority also worked with other federally-funded and non-federally-funded entities on the same topics. The OIG observes that the overlap in the CMS quality improvement efforts raises concerns about duplication of efforts and complicates attributing quality improvements to any one effort. The OIG therefore recommends that CMS: (1) take steps to coordinate and reduce overlap between the QIO program and CMS’s other quality improvement efforts; and (2) determine the relative contribution of each of its quality improvement efforts. CMS concurred with the recommendations, which were set forth in the report, “Quality Improvement Organizations Provide Support to More Than Half of Hospitals but Overlap with Other Quality Improvement Programs.”
The OIG has defended its hospital compliance review policies in response to objections raised by the American Hospital Association (AHA). Specifically, a January 15, 2015 OIG letter addresses four main areas of AHA concern about the OIG’s application of Medicare rules and policies: (1) the need for a physician order, (2) the treatment of canceled surgeries, (3) the rebilling of Medicare Part A claims under Part B, and (4) the review of claims beyond the statute of limitations. While the OIG letter cites legal authorities supporting its policies, the OIG did announce that given the “dynamic landscape” of Medicare inpatient short-stay policy, it has voluntarily suspended reviews of inpatient short-stay claims after October 1, 2013, consistent with the moratorium placed on the recovery audit contractors.
Today the OIG issued a report examining the growing use of Medicare hospice care in the assisted living facility (ALF) setting. According to the OIG, Medicare payments for hospice care in ALFs grew by more than 119% from 2007 to 2012, compared to a 38% increase in spending for hospice care provided in other settings. The OIG also reports that hospices provided care for longer periods and received higher Medicare payments for beneficiaries in ALFs compared to other settings, even though hospice beneficiaries in ALFs often had diagnoses that typically require less complex care. The median amount Medicare paid for-profit hospices for care in ALFs during the five-year period was $18,261 per beneficiary, compared to $13,941 for nonprofit hospices. The OIG contends that its findings suggest that the current payment system includes financial incentives that could encourage hospices to target beneficiaries in ALFs.
The OIG recommends that CMS take its findings into account as CMS undertakes hospice reforms mandated by the Affordable Care Act (ACA). Specifically, the OIG recommends that CMS: (1) reform payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays, (2) target certain hospices for review, (3) establish claims-based quality measures, (4) make hospice data publicly available for beneficiaries, and (5) educate hospices regarding how they compare to their peers. CMS concurred with these recommendations.
The OIG recently assessed the appropriateness of claims submitted by providers for screening for, diagnosing, evaluating, or treating cataracts, wet age related macular degeneration (wet AMD), and glaucoma in 2012. The OIG estimates that Medicare paid $22 million for ophthalmology claims in 2012 that were potentially inappropriate, according to national and local coverage requirements, although the OIG cautions that it did not review the medical records for any claims to determine if exceptions to the coverage requirements were documented and appropriate. The OIG recommends that CMS strengthen claims processing edits, and determine the appropriateness of ophthalmology claims identified in the report, and take appropriate action. CMS concurred with the recommendations in the report, “Medicare Paid $22 Million in 2012 for Potentially Inappropriate Ophthalmology Claims.”
Today the HHS Officeof Inspector General (OIG) 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 March 2, 2015.
In a separate report, the OIG discusses three safe harbor proposals received in response to its 2013 solicitation:
- A new safe harbor protecting free continuing medical education programs offered by hospitals to physicians – The OIG is not adopting this suggestion, stating that the concept of free programs could vary greatly and should be addressed on a case-by-case basis, such as under the advisory opinion process.
- A new safe harbor that would permit health care providers and suppliers in certain circumstances to compensate individuals in clinical trials and to provide services related to the clinical trials at no cost, including the waiver of cost-sharing obligations – The OIG is considering the adoption of a safe harbor that would protect the waiver of cost-sharing obligations and possibly other incentives to participants in clinical trials sponsored by certain federal government entities.
- A new safe harbor protecting clinically integrated networks’ entry into contracts with commercial third party payors for value-based payments, including pay-for-performance bonuses and shared savings awards for high quality and cost-effective health care – The OIG believes the issues raised in the proposal require further study.
The OIG has issued a report entitled “Access to Care: Provider Availability in Medicaid Managed Care,” which found that more than half of Medicaid managed care providers could not offer appointments to Medicaid enrollees, and one third could not be found at the location listed by the plan. The OIG observed that there could be long waits for appointments at those providers who offered appointments; while the median wait time was two weeks, 10% had wait times longer than two months. Primary care providers were less likely to offer an appointment than specialists, but specialists tended to have longer wait times. The OIG notes that access to care has taken on heightened importance as enrollment grows in Medicaid managed care programs. The OIG therefore urged CMS to work with states to (1) assess the number of providers offering appointments and improve the accuracy of plan information, (2) ensure that plans' networks are adequate, and (3) ensure that plans are complying with existing state standards and assess whether additional standards are needed. CMS concurred.
The OIG has issued its Semiannual Report to Congress for the period of April 1 – September 30, 2014, in which it highlights significant investigation, audit, and enforcement activities and achievements across HHS programs during the six-month period and for all of FY 2014. The OIG reports expected recoveries exceeding $4.9 billion during FY 2014, consisting of almost $834.7 million in audit receivables and about $4.1 billion in investigative receivables (including about $1.1 billion in non-HHS investigative receivables, such as states’ shares of Medicaid restitution). In FY 2014, the OIG also reported: exclusions of 4,017 individuals and entities from participation in federal health care programs; 971 criminal actions against individuals or entities; and 533 civil actions (including false claims and unjust-enrichment lawsuits filed in federal district court, CMP settlements, and administrative recoveries related to provider self-disclosure matters). In addition to discussing legal and investigative activities, the report recaps various reports issued by the OIG over the 6–month period. It also responds to public suggestions for new anti-kickback safe harbors related to hospital continuing medical education programs, clinical trial participant compensation, and contracts between clinically integrated networks (CINs) and commercial third party payors for value-based payments.