Feeley & Driscoll’s OIG Update: December 2015
The Department of Health and Human Services Office of the Inspector General (HHS-OIG) was established by Congress in 1976 to identify and eliminate fraud, abuse, and waste in HHS programs and to promote efficiency and economy in departmental operations. The OIG is responsible for conducting audits, evaluations, and both criminal and civil investigations for all HHS agencies. These functions are performed by the OIG’s Office of Audit Services (OAS).
Feeley & Driscoll’s OIG Update is a compilation of the latest additions from the OIG’s website.
This update is a monthly publication from the Healthcare Group at Feeley & Driscoll, P.C.
Please visit our Healthcare Accounting Group. This OIG Update is also accessible from the F&D website, by visiting www.fdcpa.com/oig.updates.htm.
Contents
1. New York Claimed Medicaid Reimbursement for Some Adult Day Health Care Services Provided by Metropolitan Jewish Health System That Were Unallowable
2. Englewood Hospital and Medical Center Claimed Unallowable Medicare Part B Reimbursement for Outpatient Cardiac and Pulmonary Rehabilitation Services
3. South Carolina Incorrectly Claimed Medicaid Expenditures for Indian Health Service Facilities on the CMS-64
4. Medicare Compliance Review of Nebraska Methodist Hospital for 2012 and 2013
5. New Mexico Received Millions in Unallowable Bonus Payments
6. Oregon Incorrectly Claimed Medicaid Expenditures for Indian Health Service Facilities on the CMS-64
7. High-Risk Security Vulnerabilities Identified During Reviews of Information System General Controls at Three California Managed-Care Organizations Raise Concerns About the Integrity of Systems Used to Process Medicaid Claims
8. Alaska Incorrectly Claimed Medicaid Expenditures for Indian Health Service Facilities on the CMS-64
9. Hoveround Corporation Claimed Millions in Federal Reimbursement for Power Mobility Devices that Did Not Meet Medicare Requirements
10. Average Manufacturer Prices Increased Faster Than Inflation for Many Generic Drugs
1. New York Claimed Medicaid Reimbursement for Some Adult Day Health Care Services Provided by Metropolitan Jewish Health System That Were Unallowable
The New York State Department of Health (State agency) claimed Medicaid reimbursement for some adult day health care services (ADHC) provided by Metropolitan Jewish Health System (MJHS) that did not comply with certain Federal and State requirements. Of the 100 claims in the OIGˈs random sample, the State agency properly claimed Medicaid reimbursement for 80 claims. Of the remaining claims, 18 contained services that did not comply with Federal and State requirements, and, for 2 others, the OIG could not determine whether the associated services complied with Federal and State requirements. The OIG estimated that the State agency improperly claimed at least $1.1 million in Federal Medicaid reimbursement for ADHC services provided by MJHS that that did not comply with certain Federal and State requirements.
2. Englewood Hospital and Medical Center Claimed Unallowable Medicare Part B Reimbursement for Outpatient Cardiac and Pulmonary Rehabilitation Services
Englewood Hospital and Medical Center (the Hospital) (operating in New Jersey) claimed Medicare reimbursement for outpatient cardiac and pulmonary rehabilitation services that did not comply with Medicare reimbursement requirements. For 46 of the 100 claims in the OIGˈs random sample, the Hospital improperly claimed Medicare reimbursement. On the basis of the OIGˈs sample results, the OIG estimated that the Hospital improperly received at least $115,000 in Medicare reimbursement for services that did not comply with Medicare requirements.
The OIG recommends that the Hospital:
Refund $115,000 to the Federal Government;
Implement written policies and procedures to ensure that outpatient cardiac and pulmonary rehabilitation services are provided and documented in accordance with Medicare requirements.
3. South Carolina Incorrectly Claimed Medicaid Expenditures for Indian Health Service Facilities on the CMS-64
For the period October 2007 through September 2014, the OIG determined that the South Carolina Department of Health and Human Services (State agency) incorrectly claimed Affordable Care Act Medicaid expenditures totaling $59,149,483 as Indian Health Service expenditures; however, there is no monetary recovery because these expenditures were eligible for 100-percent reimbursement.
4. Medicare Compliance Review of Nebraska Methodist Hospital for 2012 and 2013
Nebraska Methodist Hospital (the Hospital) (operating in Omaha, Nebraska) complied with Medicare billing requirements for 119 of the 138 inpatient and outpatient claims the OIG reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining 19 claims, resulting in net overpayments of $111,000 for calendar years 2012 and 2013. Specifically, 17 inpatient claims had billing errors, resulting in net overpayments of $86,000, and 2 outpatient claims had billing errors, resulting in overpayments of $25,000. These errors occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.
5. New Mexico Received Millions in Unallowable Bonus Payments
Under the Children’s Health Insurance Program Reauthorization Act of 2009, Congress appropriated $3.225 billion for qualifying States to receive performance bonus payments (bonus payments) for Federal fiscal years (FYs) 2009 through 2013 to offset the costs of increased enrollment of children in Medicaid.
Most of the bonus payments that New Mexico received for the audit period were not allowable in accordance with Federal requirements. Most of the data used in New Mexico’s bonus payment calculations were in accordance with Federal requirements. However, the State agency overstated its FYs 2009 through 2013 current enrollment in its bonus requests to CMS because it included individuals who did not qualify because of their basis-of-eligibility code. As a result, CMS overpaid New Mexico $15.9 million in bonus payments. The OIG recommends that the State agency refund $15.9 million to the Federal Government. The State agency disagreed with the OIGˈs findings and recommendation.
6. Oregon Incorrectly Claimed Medicaid Expenditures for Indian Health Service Facilities on the CMS-64
For the period October 2007 through September 2014, the OIG determined that the Oregon Health Authority (State agency) incorrectly claimed Affordable Care Act Medicaid expenditures totaling $1.2 billion as Indian Health Service expenditures; however, there is no monetary recovery because these expenditures were eligible for 100-percent reimbursement.
7. High-Risk Security Vulnerabilities Identified During Reviews of Information System General Controls at Three California Managed-Care Organizations Raise Concerns About the Integrity of Systems Used to Process Medicaid Claims
The OIG summarized the high-risk security vulnerabilities that the OIG identified as audit findings in their previous reviews of information system general controls at three California Medi Cal managed-care organizations (MCOs). The OIG identified 74 high-risk security vulnerabilities in the information system general controls at the 3 Medi-Cal MCOs the OIG reviewed. The OIG grouped these 74 vulnerabilities into 14 security control areas within 3 information system general control categories: access controls, configuration management, and security management. In 6 of the 14 security control areas, all 3 MCOs had vulnerabilities, which accounted for 53 of the 74 vulnerabilities. Accordingly, the OIG determined that most of the 74 vulnerabilities were significant and pervasive.
In six of the security control areas, the OIG noted similar vulnerabilities in all three MCOs’ information systems, which indicated that the vulnerabilities identified were systemic and pervasive across the MCOs. The OIG performed the same audit steps to assess each MCO’s general controls; however, because of minor differences in the types of information systems at each MCO, the OIG cannot conclude that all Medi-Cal managed-care information system security environments have similar vulnerabilities.
The OIGˈs consolidated findings from the individual reports show significant vulnerabilities in the three MCOs’ information systems and raise concerns about the integrity of the systems used to process Medicaid managed-care claims. California’s Department of Health Care Services (State agency) informed the OIG, in comments on the individual reports on the MCOs’ information system general controls, that it was addressing these vulnerabilities. The fact that some of the same vulnerabilities were identified at all three MCOs suggests that other California Medi-Cal managed-care information systems may be similarly vulnerable. This report is intended to provide information to assist the State agency and CMS in strengthening MCOs’ system security.
8. Alaska Incorrectly Claimed Medicaid Expenditures for Indian Health Service Facilities on the CMS-64
For the period October 2007 through September 2014, the OIG determined that the Alaska Department of Health and Social Services (State agency) overstated the Federal share of Indian Health Service Medicaid expenditures on the CMS-64.9 by $1.4 million. These errors occurred because the State agency did not have adequate review procedures to identify data entry errors in the supporting documents of the CMS-64.
9. Hoveround Corporation Claimed Millions in Federal Reimbursement for Power Mobility Devices that Did Not Meet Medicare Requirements
Hoveround Corporation often did not claim Medicare reimbursement for power mobility devices (PMDs) in accordance with Medicare requirements. Medicare Part B covers PMDs, which include power wheelchairs and power-operated vehicles. High incidences of fraud and improper payments have been historically associated with PMDs. In 2010, Hoveround received almost $50 million for PMD claims, the second-largest Federal reimbursement for PMDs supplied to Medicare beneficiaries.
For 154 of 200 of the sampled beneficiaries the OIG reviewed, Hoveround received payments for claims that did not comply with Medicare requirements. For 144 sampled beneficiaries, Hoveround did not support the medical necessity of PMDs; for 10 sampled beneficiaries, Hoveround provided incomplete documentation to support the PMD claims. On the basis of the OIGˈs sample results, the OIG estimated that Medicare paid Hoveround $27,027,579 for PMDs that did not meet Medicare requirements during 2010.
The OIG recommends that Hoveround:
· Refund $27,027,579 to the Federal Government;
· Implement internal controls to ensure that Medicare requirements are followed to support beneficiaries’ medical needs for PMDs and ensure that supporting documentation for PMDs meets Medicare requirements before providing PMDs to beneficiaries.
In written comments on the OIGˈs draft report, Hoveround disagreed with the OIGˈs recommendations. Hoveround stated that OIG did not inform Hoveround that it was conducting a medical necessity review and as a result Hoveround was not able to submit all of the necessary supporting evidence. Hoveround stated that the OIG influenced the medical review performed by the Durable Medical Equipment Medicare Administrative Contractors (DME MACs) and biased the results. Hoveround stated that the DME MACs’ conclusions were wrong because they did not apply the correct standards. Hoveround also stated that the OIG’s extrapolation of the audit results was improper.
The OIG maintains that Hoveround was informed of the need to provide OIG with medical records to support the medical necessity of its claims. OIG did not influence or bias the result of the DME MACs’ medical necessity review. The OIG maintains that the DME MACs used the correct Medicare standards in conducting their medical review. Finally, the OIGˈs extrapolation of the audit results was appropriate. For reasons the OIG explains in the report, the OIG stands by their audit methodology, procedures, findings, and recommendations.
10. Average Manufacturer Prices Increased Faster Than Inflation for Many Generic Drugs
Generic drug price increases exceeded the specified statutory inflation factor applicable to brand-name drugs for 22 percent of the quarterly average manufacturer prices the OIG reviewed. If the provision for brand-name drugs were extended to generic drugs, the Medicaid program would receive additional rebates. The OIG calculated that Medicaid would have received a total of $1.4 billion in additional rebates for the top 200 generic drugs, ranked by Medicaid reimbursement, from 2005 through 2014. The additional rebates for the top 200 generic drugs increased most years, from more than $39 million in 2005 to more than $464 million in 2014.
The OIGˈs findings are consistent with the OIGˈs previous work and support the OIGˈs prior recommendations that CMS consider seeking legislative authority to extend the additional rebate provisions to generic drugs. On November 2, 2015, the Bipartisan Budget Act of 2015 (P.L. No. 114-74) was enacted and included provisions extending the additional rebate to generic drugs. The additional rebate for generic drugs will apply to rebate periods beginning with the first quarter of 2017. Therefore, the OIG is not making any additional recommendations.