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2013 OIG Work Plan Summary

Anthony J. Burba, Esquire Arnold & Porter LLP

Washington, DC

Amy K. Fehn, Esquire Wachler & Associates PC

Royal Oak, MI

Matthew R. Fisher, Esquire Mirick O'Connell DeMallie & Lougee LLP

Worcester, MA

David L. Haron, Esquire Frank Haron Weiner PLC

Troy, MI

Carolyn F. McNiven, Esquire DLA Piper LLP (US)

San Francisco and East Palo Alto, CA

Lisa T. Rosenbaum, Esquire Ropes & Gray LLP

New York, NY

Laura E. Schattschneider, Esquire* General Attorney

Centers for Medicare & Medicaid Services Division Office of the General Counsel

U.S. Department of Health & Human Services

DECEMBER 2012

MEMBER BRIEFING

FRAUD AND ABUSE PRACTICE GROUP

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Part I: Medicare Part A and Part B Hospitals, Nursing Homes, Hospices, Home

Health Services, and Medical Equipment and Supplies

Hospitals

In the coming year, the U.S. Department of Health and Human Services (HHS), Office

of Inspector General (OIG) will initiate eleven new reviews of hospital practices. To

assess inpatient billing accuracy, OIG will review changes in inpatient billing stays from

2008–2012 and how practices evolved. A new study will also begin of whether the

Centers for Medicare & Medicaid Services (CMS) could save money by bundling

payments for outpatient services delivered up to fourteen days prior to an inpatient

hospital admission as opposed to the current three-day pre-admission window.

Additional new studies related to billing include reviewing non-hospital-owned physician

practices billing as provider-based physician practices, which can result in higher

reimbursements; compliance with transfer policies and use of swing beds in hospitals

receiving discharged patients; payments for canceled surgical procedures that raise

concerns for multiple billings; and payments for mechanical ventilation to ensure

patients received the service for the minimum required ninety-six hours. Other new

studies include assessment of the extent to which Quality Improvement Organizations

worked with hospitals to conduct quality improvement projects or provide technical

assistance, and the impact to Medicare payments by hospital acquisitions of ambulatory

surgery centers.

Ongoing reviews of hospital procedures include focus on readmissions and transfers.

OIG will review same-day admission data to determine the basis for the patient being

readmitted and whether stays are appropriately combined. OIG is also continuing its

review of transfers, specifically the frequency of patients being discharged to hospice

care after a short stay at the hospital. Additionally, OIG will review claims to determine

whether acute care hospitals are frequently transferring patients with certain diagnoses

that were coded as present at admission.

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OIG is also continuing service and billing reviews. Inpatient and outpatient payments to

acute care hospitals will be examined to recommend recovery of overpayments and

identify providers that routinely submit improper claims. Inpatient outlier payments will

continue to be reviewed to identify characteristics of hospitals with high or increasing

rates of outlier payments. OIG will also determine whether CMS performed necessary

reconciliations to allow Medicare contractors to perform final settlement of cost reports

associated with outlier payments. OIG will also continue its study of graduate medical

education payments for occurrences of duplicative or excessive payments.

OIG will continue its review of the use of observation services and characteristics of

beneficiaries who received such services. OIG is determining how much Medicare paid

for such services.

Nursing Homes

OIG is initiating three new studies of nursing homes. OIG will determine whether state

survey agencies verified correction plans for deficiencies identified during recertification

studies. Regulations require nursing homes to submit correction plans for such

identified deficiencies. OIG will also initiate a study of the administration of atypical

antipsychotic drugs, including the type of such drugs most commonly used and

characteristics associated with nursing homes that more frequently administer the

drugs. The third new study will assess the extent to which CMS and states oversee the

accuracy and completeness of Minimum Data Set data submitted by nursing homes.

Ongoing studies will focus on reviews of adverse and temporary harm events for

beneficiaries receiving post-acute care in nursing homes. OIG will identify contributing

factors to such events and the extent to which such events were preventable. OIG is

also continuing its review of the use of Residential Assessment Instruments to develop

care plans to beneficiaries.

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OIG will review poorly performing nursing homes and ensure that corrective actions are

being taken to address the poor performance. OIG is also concerned about

hospitalizations of Medicare beneficiaries in nursing homes and is continuing its

examination of which hospitalizations were caused by manageable or preventable

conditions.

OIG is also reviewing questionable billing patterns associated with nursing homes.

Services must be billed directly by suppliers and other providers and OIG was directed

to monitor these services for abuse.

Hospices

OIG is continuing its examination of hospices’ marketing materials and financial

relationships with nursing facilities. OIG previously found that 82% of hospice claims for

beneficiaries in nursing facilities did not meet coverage requirements. OIG is also

continuing its assessment of general inpatient care claims submitted by hospices.

Home Health Services

OIG is initiating a new study of Home Health Agency (HHA) compliance with face-to-

face encounter requirements. Physicians or certain other practitioners working with

physicians are required by statute to certify that beneficiaries are eligible for home

health services within a specified time period. OIG is also starting a review of the extent

to which HHAs comply with state requirements to perform criminal background checks

of applicants and employees.

OIG is continuing review of the timeliness of HHA recertification and complaint surveys

as well as CMS oversight designed to monitor such surveys. OIG is also continuing its

examination of HHA Outcome and Assessment Information Set (OASIS) data to identify

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payments for episodes where OASIS data is not submitted or codes are not consistent

with the OASIS data.

OIG is continuing review of activities performed by CMS and its contractors to identify

and prevent improper home health payments by reviewing payments from January to

October 2011. OIG is also looking at compliance with the home health prospective

payment system, including whether proper documentation exists to support claims. OIG

is also looking at HHA revenue and expense trends to determine whether payment

methodologies are appropriate.

Medical Equipment and Supplies

OIG is initiating seven new reviews of medical equipment and supply services. OIG will

review the accreditation organization requirements and processes for granting

accreditation to medical equipment suppliers and how it is ensured that Medicare quality

standards are met. OIG is also starting to look at compliance for claims submitted in

connection with lower limb prosthetics to determine whether requirements in CMS’

Benefits Policy manual are being met. Power mobility devices are also the subject of a

new review to ensure claims submitted were appropriate. OIG is also examining the

reasonableness of fee schedule amounts for vacuum erection systems. OIG will

compare the supply replacements schedules for supplies related to continuous positive

airway pressure machines in comparison with other federal programs to identify

potential savings. Several new reviews will look at the extent to which suppliers are

improperly billing Medicare for non-mail order diabetes test strips in competitive bidding

areas.

Ongoing program integrity reviews focus on the reliability of service code modifiers

entered by suppliers on claims. Supporting documentation must exist for the modifier

used. OIG is also continuing its review of the use of surety bonds to recover

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overpayments, including whether CMS maintains complete and accurate surety bond

information about suppliers.

Specific supplies continue to be an OIG focus. OIG is still reviewing the reasonableness

of Medicare payments for parenteral nutrition as compared to other federal programs.

Frequently replaced supplies are another concern. OIG is still reviewing claims to

determine whether medical necessity, frequency, and other Medicare requirements are

being met in claims that are submitted. With regard to diabetes testing supplies, OIG is

still looking at whether claims for home blood glucose test strips and lancet supplies are

appropriate, including whether an appropriate modifier code is used. OIG is also

reviewing whether system edits are effective to prevent inappropriate payments for

home blood glucose test strips and lancets. OIG is also reviewing claims data from

2011 to identify suppliers with inappropriate payments and/or questionable billings.

Common to All Providers

In new reviews, OIG will determine how often onsite visits occur as part of the Medicare

enrollment or reenrollment process to implement the requirements under the Patient

Protection and Affordable Care Act of 2010 (ACA) for increased site visits to weed out

fraudulent providers billing without a physical location. A similar review will be

conducted to determine which Medicare Part B providers had practice locations that

matched commercial mailbox addresses in 2011, again targeting fraudulent providers

that use commercial mailbox services to cover up the fact that they do not have a

physical practice location. Another new review will involve Medicare Part A and Part B

claims submitted by error-prone providers to determine their validity, project the results

to each provider’s population of claims, and recommend that CMS requests funds on

projected overpayments. “Top error-prone providers” will be those with the highest

dollar error amounts over a four-year period based on a review using CMS’

Comprehensive Error Rate Testing (CERT) Program Data. OIG will review providers

and suppliers to determine if any received payment under a new Medicare provider

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number, despite having been referred to the U.S. Department of Treasury for failure to

refund overpayments. CMS may deny a provider’s or supplier’s enrollment in the

Medicare program if the current owner, physician, or non-physician practitioner has an

existing overpayment at the time of filing an enrollment application.

OIG will continue its review of payment systems controls that identify high cumulative

Medicare Part B Payments to physicians and suppliers to determine the effectiveness of

those controls. “A high cumulative payment is an unusually high payment made to an

individual physician or supplier, or on behalf of an individual beneficiary, over a

specified period.” OIG will continue to review Medicare claims submitted with G

Modifiers (indicating that the supplier expected Medicare to deny payment), and the

extent to which Medicare paid such claims. OIG will also look for suppliers with

atypically high billing related to the G modifiers.

Physicians

OIG will continue to review the extent to which physician-owned distributors (PODs)

provide spinal implants purchased by hospitals, and whether those PODs are

associated with high use of spinal implants. OIG will continue the review of physicians’

compliance with the assignment rules to determine to what extent beneficiaries are

being inappropriately billed in excess of the Medicare allowable amounts. “Incident to”

services will be reviewed to determine whether they reflect a higher rate of error than

that of non-incident-to services; OIG noted its concerns with the potential for unqualified

non-physicians performing incident-to services, and its suspicions that such services

may be prone to overutilization. OIG will also continue its study of Place-of-Service

(POS) claims errors when physician services are provided in a location that receives

facility fees (resulting in excess payments to the physician if the POS is identified as a

non-facility setting). OIG will continue to assess the extent to which CMS made

potentially inappropriate payments for evaluation and management (E/M) services and

the consistency of E/M medical review determinations, though apparently limiting its

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review in 2013 to claims from 2010. OIG will also look at the use of modifiers for

services provided during the global surgery period.

OIG will review Medicare Part B claims for personally performed anesthesia services to

determine whether they were supported in accordance with Medicare requirements, as

well as determine whether payments for anesthesiologists services reported on a claim

with the “AA” service code modifier met Medicare requirements. Another new review will

focus on questionable billing for ophthalmological services during 2011, as well as a

review of the geographic locations of providers exhibiting questionable billing for

ophthalmological services in 2011.

Independent Therapists

OIG will continue its review of outpatient physical therapy services, focusing on

independent therapists who have a high utilization rate.

Sleep Disorder Clinics

For this ongoing review, OIG will examine the appropriateness of Medicare payments to

physicians and independent diagnostic testing facilities for sleep test procedures,

including appropriate use of modifiers that impact payment. Polysomnography

payments will also be examined.

Ambulances

One new review will compare reimbursements by other payors to those of the Medicare

fee schedule for similar services. Another new review will examine Medicare claims

data to identify questionable billing, such as transports that were potentially not

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medically reasonable and necessary, and potentially unnecessary billing for Advanced

Life Support Services and specialty care transport. OIG also plans to examine

relationships between ambulance companies and other providers.

Ambulatory Surgical Centers (ASCs)

OIG will review the appropriateness of Medicare’s methodology for setting ASC

payment rates. A new element of this review for 2013 will determine whether there is a

payment disparity between the ASC and Hospital outpatient department payment rates

for similar surgical procedures provided in both settings. OIG will continue its review of

the safety and quality of care for Medicare beneficiaries receiving services in ASC and

Hospital Outpatient Departments, apparently looking to compare the results for the two

settings.

Partial Hospitalization

OIG will continue its ongoing review of Partial Hospitalization Program (PHP) services,

including whether payments met Medicare requirements for documentation of plan of

care and physician supervision and certification requirements. The review of

questionable billing practices for PHP services included in the 2012 Work Plan will not

be continued in 2013.

Rural Health Clinics

In a new review OIG will determine the extent to which Rural Health Clinics (RHC) do

not meet basic location requirements to identify RHCs receiving enhanced Medicare

reimbursement despite failing to meet the locality requirements in the Balanced Budget

Act of 1997.

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Electrodiagnostic Testing

In a new review OIG will look at Medicare claims data to identify questionable billing for

electrodiagnostic testing and will determine the extent to which Medicare utilization

rates differ by provider specialty, diagnosis, and geographic area.

Part B Imaging Services

OIG will continue its review of Medicare payments to determine whether they reflect the

expenses incurred and whether utilization rates reflect industry practice.

Diagnostic Radiology

For this ongoing review, OIG will look at Medicare payments for high-cost diagnostic

radiology tests to determine if they were medically necessary and whether the same

diagnostic tests are repeated for the same beneficiary when ordered by different

physicians treating the patient.

Laboratories

Though not listed as new, a review not included in the 2012 work plan will describe

billing characteristics for Part B clinical laboratory tests in 2012. An ongoing review will

examine how the methods of establishing Medicare laboratory test payment rates vary

from those of state Medicaid and Federal Employee Health Benefits programs. The

methodology for this review will compare Medicare payment rates for 20 lab tests (those

identified as most frequently ordered and most costly in terms of total dollars paid)

against the payment rates of those other programs. Finally, OIG will continue to work on

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its review of Part B payments for glycated hemoglobin A1C tests, with a focus on the

Medicare contractors’ procedures for screening for appropriate frequency of testing.

Chiropractors

OIG will review Medicare Part B payments for chiropractic services to determine

whether such payments were for medically reasonable and necessary services.

Specifically, chiropractic maintenance therapy is not considered medically reasonable or

necessary.

Organ Procurement Organizations

OIG will continue its review of Medicare payments to Organ Procurement Organizations

to determine if those payments were correct and supported by documentation, including

whether the organizations correctly reported organ statistics for purposes of proper

allocation of costs in their cost reports.

End Stage Renal Disease (ESRD)

OIG will look at Medicare’s oversight of dialysis facilities, including the accountability of

state survey and certification agencies. In another review, OIG will look at Medicare

pricing and utilization under the new End Stage Renal Disease (ESRD)-Prospective

Payment System “bundled” payment. OIG will also be reviewing ESRD drug payments.

OIG will also review payments for ESRD drugs under the new bundled rate system by

comparing facilities’ acquisition costs for certain drugs to inflation-adjusted cost

estimates and determine how costs for the drugs have changed since the last review.

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Part B Payments for Prescription Drugs

OIG will continue several ongoing reviews, including a comparison of average sales

prices to average manufacturer prices and a comparison of average sales prices to

widely available market prices. OIG will continue to examine payments for off-label anti-

cancer pharmaceuticals and biologicals, and whether alternative drugs might have

continued to be used instead. OIG will also look at acquisition costs and payments, and

usage patterns and payments, for Lucentis and Avastin related to treating wet age-

related macular degeneration. Another review will focus on payments for commonly

used physician-administered drugs and biologicals to determine if significant savings

could be achieved by a change in Part B reimbursement methodologies. OIG will

continue to focus on off-label and off-compendia use of drugs, and identify CMS

oversight mechanisms. OIG will also be scrutinizing payments associated with the drug

Herceptin, and whether wastage allowances were billed appropriately. OIG will also look

to see if outpatient drug claims (e.g., chemotherapy) were paid inappropriately because

of incorrect coding or overbilling of units.

OIG has identified eight new reviews for Fiscal Year (FY) 2013 OIG will look into the

extent to which the prescription drug compendia oversee conflicts of interest through

reporting requirements and/or mitigation policies and the number and nature of the

compendia’s reported conflicts. In 2013, OIG will work to determine the extent to which

providers of Part B drugs that are in short supply report those shortages. Hospitals will

also be asked to provide information on experiences with drug shortages, including any

effect on pricing, quality of care, and market availability. Rounding out its look at the

effect of drug shortages, OIG will quantify the effect of drug shortages on manufacturer

sales, including using data from CMS to determine the extent to which demand and

average sales price (ASP) of drugs changed when the drugs were reportedly in

shortage and whether drugs that did not show substantial decline in unit during the

shortage quarter experienced an increase in Part B utilization during that period. OIG

will conduct a review of whether Part B payments for immunosuppressive drugs billed

with the KX modifier met Medicare documentation requirements. Another new review

will look at provider acquisition costs for Part B-covered drugs infused through medical

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equipment and determine the amount Medicare could have saved had payment

amounts for these drugs been based on ASP (infused drugs, as opposed to other

reimbursed drugs, are paid based on average wholesale price). Finally, OIG will

conduct a new review to determine the financial impact of rescinding least costly

alternative (LCA) policies for certain prostate cancer drugs covered under Part B and

how Part B utilization for those drugs changed after the LCA policies were rescinded.

Part A and B Contractors

OIG has several new reviews related to its oversight of Part A and B contractors. First,

OIG will conduct a review of CMS’ contracting landscape including the number, types,

and dollar amount of active CMS contracts and how CMS maintains all of its contract

information. OIG will also examine CMS’ compliance with contract documentation

requirements. OIG will examine the extent to which CMS conducted performance

assessment and monitoring of the Medicare Administrative Contractors (MACs) and

describe the extent to which the MACs met, did not meet, or exceeded performance

standards and the extent to which CMS identified and MACs addressed performance

deficiencies. Also new for 2013 is a review of whether MACs fulfilled their contractual

obligations specific to system edits in 2010 and 2011 and how MAC error rates varied

across regions compared to differences in MACs’ implementation, application, and

evaluation of edits since 2010 and 2011. OIG will also determine the number of Part B

claims that were suspended for manual prepayment review on the basis of system edits

but on which the reviews were not conducted. Another new review will be of CMS’

oversight of fraud and abuse task order requirements for Zone Program Integrity

Contractors.

OIG will also continue to monitor contractor performance and reporting related to

administrative costs, whether Medicare contractors have calculated and claimed

reimbursement for Medicare’s share of various employee pension costs, the post-

retirement health benefit costs, post-retirement health benefit costs for fiscal

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intermediaries (FIs) and carriers, and whether contractors are meeting error rate

reduction plan requirements. OIG will also review the extent that Recovery Audit

Contractor- (RAC-) identified improper payments and vulnerabilities and made potential

fraud referrals in 2010 and 2011, and the activities that CMS performed to resolve RAC-

identified vulnerabilities, address potential fraud referrals, and evaluate RAC

performance in 2010 and 2011. Another review will look at the performance evaluation

reports submitted to CMS by the National Supplier Clearinghouse (NSC) to determine

whether the NSC performs all contractually required activities and to assess their results

and an assessment of CMS’ oversight of the NSC. OIG will also conduct independent

evaluations of information systems security programs of Medicare FIs, carriers, and

MACs and report the assessment to Congress. OIG will review CMS’ policies,

instructions, and procedures designed to ensure adherence to federal data privacy,

information security, and contractual requirements and conduct information technology

closeout audits at Medicare contractors that left the program during FYs 2007 and 2008

and assess compliance with federal requirements. OIG will continue reviewing security

controls implemented by Medicare and Medicaid contractors as well as hospitals to

prevent the loss of protected health information stored on portable devices and media.

Finally, OIG will review to what extent Part B services and items paid under the

Medicare Physician Fee Schedule are affected by Local Coverage Determinations

(LCD) and the variation in coverage for these services and items as a result, as well as

CMS’ efforts to evaluate and adopt new LCDs for national coverage.

Other Part A and Part B Management Systems Issues

OIG has several additional new reviews in this area. OIG will review whether Medicare

payments for incarcerated beneficiaries complied with federal requirements as well as a

review of payments made on behalf of beneficiaries who were unlawfully present in the

United States on the dates of service. A review will also be conducted in 2013 to

determine whether Medicare payments were made for deceased beneficiaries in 2011.

Another new review has OIG looking at the procedures that CMS and claims processors

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have for handling undelivered Medicare Summary Notices. Another new review will look

at whether requirements were met with respect to post-Hurricane Katrina recovery

grants.

OIG will continue several reviews from previous years including an assessment of the

effectiveness of Medicare’s controls regarding Medicare as Secondary Payer. OIG will

continue its oversight of the CERT program to evaluate CMS’ efforts to ensure the

accuracy of the FY 2012 error rate and to reduce improper payments. OIG will also

assess the National Provider Identification and Provider Enrollment, Chain, and

Ownership System data to ensure they are complete, consistent, and accurate and

access CMS’ supporting processes. OIG will review CMS’ compliance with the Privacy

Act of 1974 and determine whether CMS is accounting for disclosures in accordance

with that act, and also describe CMS’ policies and practices in implementing the

safeguards to protect individuals’ records. OIG will also evaluate CMS’ declaration of

overpayments deemed currently not collectable and review CMS’ actions to reduce and

recover currently not collectible debt. Finally, OIG will renew its efforts to describe

redeterminations processed in 2008–2011 for Medicare Parts A and B

Part II: Medicare Parts C and D

Oversight of Medicare Parts C and D

As described in more detail below, OIG will continue to review the activities of, and

oversight by, Medicare Advantage (MA) organizations, Part D sponsors, and CMS. OIG

will also focus on monitoring Medicare Parts C and D fraud, waste, and abuse by

reviewing the benefit integrity activities of the National Benefit Integrity (NBI) program

Medicare Drug Integrity Contractors (MEDICs). Such benefit integrity activities include

measures taken by the NBI MEDIC to detect and prevent Medicare Parts C and D

fraud, waste, and abuse nationwide. OIG will assess the volume of the NBI MEDICs’

benefit integrity activities and the barriers they have encountered in performing them.

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Part C (Medicare Advantage)

As a result, in part, of the expansion in 2012 of MA encounter data reporting

requirements from an abbreviated set of diagnosis data to a more comprehensive set of

data, OIG will begin a new review of CMS’ oversight of encounter data, including the

extent to which such data is complete, consistent, and verified for accuracy by CMS.

Further, OIG will continue to engage in the following reviews of CMS’ oversight efforts: a

review of CMS’ oversight of the enrollment practices of Special Needs Plans to

determine their compliance with enrollment requirements; a review of the work

performed by CMS’ Office of the Actuary and its contracted actuary reviewers to ensure

that its reviews of Part C bids were conducted in accordance with Medicare policies and

procedures, and that issues identified during such reviews were sufficiently addressed

before bid approval; and an assessment of CMS’ efforts to ensure MA organizations’

compliance with Part C reporting requirements.

With respect to risk-adjusted payments, OIG will continue to review the accuracy of risk-

adjustment data submitted by, and the validity of resulting payments issued to, MA

organizations, including those that offer prescription drug plans (MA-PD organizations).

Accordingly, OIG will engage in the following activities: a review of whether CMS

properly adjusted payments to MA organizations based on the results of its risk-

adjustment data validation reviews; an assessment of whether diagnoses that MA

organizations submitted to CMS for use in determining risk-adjusted payments to such

organizations complied with federal requirements and were supported by medical

record documentation; and a review of whether the beneficiary diagnosis codes

submitted to CMS by MA-PD organizations were valid and based on accurate

supporting data, and thus resulted in accurate risk scores and risk-adjusted payments to

MA-PD organizations.

To ensure quality performance by MA organizations, OIG will continue to review the

organizations’ oversight of contractors that provide enrollees benefits, such as

prescription drugs and mental health services. Significantly, it will also begin to review

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notices sent to beneficiaries by MA organizations regarding denied requests or

payments for services. During this new review, OIG will determine whether these

notices clearly explained beneficiaries’ appeal rights. OIG will then compare the denials

of services and payments for which beneficiaries chose to appeal with those denials for

which beneficiaries did not choose to appeal.

Finally, OIG will maintain its efforts to identify duplicate Medicare capitation and fee-for-

service payments to selected cost-based Health Maintenance Organization plans. It will

also continue to review expenditures listed on cost reports by selected Healthcare

Prepayment Plans to determine whether these expenditures were reasonable and

allowable for reimbursement.

Part D (Prescription Drug Program)

Part D Sponsor Oversight and Program Integrity Initiatives

To promote the shared responsibilities of CMS and Part D sponsors to protect the Part

D program from fraud, waste, and abuse, OIG has begun a review of Part D sponsors’

oversight of pharmacy benefit managers’ (PBMs’) administration of plan benefits and

implemented two new program integrity initiatives. Specifically, OIG will assess the Part

D sponsors’ abilities to oversee PBM administration of formularies and management of

prescription drug use. With respect to the program integrity initiatives, OIG will identify

safeguards established by pharmaceutical manufacturers to ensure that beneficiaries

do not use copayment coupons to obtain drugs paid for by the Part D program. OIG will

also review the volume of voluntary reports to CMS since 2010 by Part D sponsors

about their antifraud, waste, and abuse activities related to the Part D program,

including the types of fraud, waste, and abuse incidents and how plan sponsors identify

and respond to these incidents.

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Patient Safety

To ensure patient safety and quality of care, OIG will continue to assess whether the

drugs used in the Part D program were determined to be safe and effective by the U.S.

Food and Drug Administration (FDA) and whether Part D beneficiaries received only

those drugs that the FDA had deemed safe and effective.

Specialty Tier Formularies and Related Cost-Sharing

Under CMS requirements, the monthly cost of a drug must exceed a certain amount for

inclusion on the specialty tier of a drug formulary.1 OIG notes that if CMS sets this

amount too low or the Part D sponsor misclassifies a drug as a specialty drug, a

beneficiary’s plan choices, drug adherence, and drug choices may be affected. Given

this concern, OIG will begin a new assessment of the variation in specialty tier

formularies and beneficiary cost-sharing requirements across prescription drug plans.

Reviews of Part D Drug Data and Payments

OIG will maintain its review of Prescription Drug Event records to determine the extent

to which Part D sponsors submitted data for prescription drugs for incarcerated

individuals and whether CMS accepted such data. In addition, OIG will continue its

previous reviews of the following: differences between the drug manufacturer rebate

amounts negotiated and received by Part D sponsors or PBMs and its impact on direct

and indirect remuneration reports submitted to CMS; sufficiency of Part D sponsors’

documentation supporting administrative costs and investment income included in their

annual bid proposals to CMS; risk-sharing payments between the government and Part

D sponsors to determine whether cost savings could have been realized had the

1 See Medicare Prescription Drug Benefit Manual, Chapter 6-Part D Drugs and Formulary Requirements,

Section 30.2.4 (last revised Feb. 19, 2010).

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existing risk corridor thresholds remained at 2006 and 2007 levels; accuracy of Part D

sponsors’ tracking of beneficiaries’ true out-of-pocket costs; and data submitted by Part

D sponsors to calculate the coverage gap discount.

Further, OIG will maintain its review of Part D claims to determine whether the Part D

program is receiving the discount drug prices available at certain retail pharmacies with

discount generic drug programs and whether Part D claims have been duplicated in

Part A or Part B. OIG will also assess questionable billing in 2010 for human

immunodeficiency virus (HIV) drugs under the Part D program and identify pharmacies,

prescribers, and beneficiaries associated with these billing practices.

Lastly, OIG will continue to review CMS’ processes for reopening final payment

determinations and assess Part D drug claims billed in 2009 to identify any common

characteristics of prescribers and beneficiaries associated with unusually high billing.

OIG will also review the implementation of information systems at small and medium

size plans and plans relatively new to the Medicare program. It will assess the plans’

compliance with Part D contractual requirements, CMS regulations, and CMS

instructions for systems that support key Part D components such as coordination of

benefits and beneficiary enrollment.

Part III: Medicaid Reviews

In FY 2013, OIG will review the following general areas of the Medicaid program:

prescription drugs; home, community, and personal care services; other Medicaid

services, equipment, and supplies; state management of Medicaid; the Children’s

Health Insurance Program (CHIP) for Medicaid-eligible individuals; information systems;

and managed care.

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Prescription Drugs

OIG will continue several ongoing reviews of Medicaid drug pricing and manufacturer

rebates, including two reviews tracking the implementation of manufacturer rebate

provisions of the ACA.

OIG also included three new reviews in the FY 2013 Work Plan. Two of these relate to

manufacturer rebates: the first will evaluate states’ collection of rebates for physician-

administered drugs, and the second will determine whether states are collecting

increases in the minimum federal rebate pursuant to the ACA and evaluate whether and

how these federal increases are affecting state collection of supplemental rebates.

The third new review will examine the extent to which Medicaid claims for atypical

antipsychotic drugs prescribed to children related to off-label uses or indications not

included in one of the approved drug compendia. Such prescriptions have been the

focus of media and congressional attention since at least late 2011, when a study in the

journal Pediatrics indicated that Medicaid-eligible foster children frequently received

such prescriptions, the U.S. Government Accountability Office released a report

outlining similar findings, and a subcommittee of the Senate Committee on Homeland

Security and Government Affairs held a hearing on the topic.2 OIG has also released

several reports in recent years about prescription of atypical antipsychotics to Medicare-

eligible nursing home residents.3

Home, Community, and Personal Care Services

OIG will continue several ongoing reviews evaluating home, community, personal care,

and school-based services for compliance with the prerequisites for claiming federal

2 See www.hsgac.senate.gov/hearings/the-financial-and-societal-costs-of-medicating-americas-foster-

children; U.S. Government Accountability Office, HHS Guidance Could Help States Improve Oversight of Psychotropic Medications (Dec. 2011), available at www.gao.gov/assets/590/586570.pdf. 3 See, e.g., OIG, Medicare Atypical Antipsychotic Drug Claims for Elderly Nursing Home Residents, Rep.

No. OEI-07-08-00150 (May 2011), available at https://oig.hhs.gov/oei/reports/oei-07-08-00150.asp.

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financial participation, including compliance with quality and provider qualification

standards.

Four new reviews are included in the FY 2013 Work Plan. In the first of these, OIG will

review state Medicaid payments for home health services to determine whether and to

what extent Medicare and Medicaid are both paying for the same services. Medicaid

should be the payor of last resort for these services, but may cover some home health

services in the first instance for dual eligibles, in part because the two programs have

different eligibility requirements for home health services. For example, there are

differences in Medicare and Medicaid requirements to qualify as “homebound.”

In the three other new reviews, OIG will determine whether state claims for home-and-

community-based (HCBS) waiver services comply with federal requirements. In two of

them, OIG will focus specifically on claims for supported employment services and adult

day healthcare services. In the third, it will review HCBS waiver claims more generally

to determine whether states are inappropriately claiming for room-and-board costs.

Other Medicaid Services

OIG will continue ongoing reviews of claims for hospice, family planning, and

transportation services. It will also continue an ongoing review monitoring state

compliance with the ACA provisions barring federal payments for healthcare-acquired

conditions.

Several new reviews are also included in the Work Plan. Four of these will focus on

potential Medicaid cost savings for medical equipment and supplies, both generally and

with regard to payment for home blood-glucose test strips and disposable incontinence

supplies. Two new reviews will focus on billing patterns and irregularities related to

dental services for children. OIG stated that its “[p]rior work indicates that some dental

providers may be inappropriately billing for services,” and Texas dental claims were the

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subject of a congressional hearing in April 2012.4 OIG will also begin a review of nursing

facility claims for communicable disease care that it says was prompted by a prior audit

that discovered unallowable state claims related to such care.

State Management of Medicaid

OIG groups numerous ongoing reviews related to state compliance with federal

claiming, rate-setting, and reporting requirements under this heading, which is new from

last year. It also lists reviews of several new topics:

Whether states are using the Federal Medical Assistance Percentages rates that

were in effect when expenditures were made when they report claim adjustments;

Whether states are claiming excessive federal reimbursement for Medicare

coinsurance and deductibles;

Whether states are using acceptable statistical sampling practices to allocate costs

among federal programs;

How the new state RACs are performing;

Whether states are enrolling and monitoring medical equipment suppliers in

accordance with state standards;

Whether states are appropriately determining hospital eligibility to participate in the

Medicaid program;

Whether states are complying with federal requirements for recovering and reporting

medical assistance costs from the estates of deceased beneficiaries; and

4 See http://oversight.house.gov/hearing/joint-hearing-is-government-adequately-protecting-taxpayers-

from-medicaid-fraud/.

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Whether states are complying with Money Follows the Person demonstration

program requirements.

OIG will also continue a review of state provider taxes that was added to the Work Plan

last year.

CHIP for Medicaid-Eligible Individuals

OIG groups two ongoing reviews of state administration of the CHIP program and

coordination of benefits under CHIP and Medicaid under this heading, which is new

from last year.

Information Systems

In FY 2013, OIG will continue several ongoing reviews of the integrity, security, and

accuracy of state information systems. It lists one new audit: an assessment of how well

a pilot database for claims and encounter information (the Transformed Medicaid

Statistical Information System) is working to improve detection of fraud, waste, and

abuse.

Medicaid Managed Care

OIG will continue several ongoing reviews examining whether managed care

organizations and states are providing Medicaid managed services in accordance with

federal requirements, including requirements regarding provider credentialing,

marketing, encounter data, and fraud and abuse detection and deterrence. OIG will also

continue a review of Medicaid managed care organization medical loss ratio refunds to

states.

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Three new reviews were included in the FY 2013 Work Plan. OIG will review whether

Medicaid managed care provider networks ensure sufficient beneficiary access to

services; whether states are ensuring that Medicaid managed care organization internal

grievance and appeals processes comply with federal requirements; and whether

Medicaid managed care organizations and states effectively identified, corrected, and

prevented fraud, waste, and abuse in 2011.

Other Medicaid-Related Reviews

In FY 2013, OIG will continue the following miscellaneous ongoing reviews: whether

Medicaid overpayments exist in provider patient accounts with credit balances; whether

CMS’ implementation of the Payment Error Rate Measurement process is achieving

desired results; whether CMS is adequately overseeing nursing home data

submissions; and how well state Medicaid Fraud Control Units (MFCUs) are performing.

Part IV: Legal and Investigative Activities Related to Medicare and Medicaid

Legal Activities

OIG will continue to advance its enforcement agenda through legal activities such as

imposing program exclusions and civil monetary penalties and assessments, monitoring

Corporate Integrity Agreements (CIAs), and issuing fraud alerts, advisory opinions, and

other industry guidance. It will also continue the activity initiated in FY 2012, namely

review of entities that do not enter CIAs.

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Exclusion from Program Participation

Individuals and entities may be excluded by OIG from participating in Medicare,

Medicaid, and other federal healthcare programs. Exclusions can be based on a variety

of underlying misconduct, ranging from licensing board disciplinary actions to program-

related and patient abuse convictions. State agencies typically refer matters to OIG for

potential exclusion.

Civil Monetary Penalties

OIG also imposes Civil Monetary Penalties (CMPs) for a variety of misconduct, such as:

Involvement in kickbacks under Section 1128B(b) of the Social Security Act;

Emergency Medical Treatment and Labor Act violations;

Provision of sub-standard items or services to patients; and

Other healthcare misconduct implicating OIG’s statutory authority.

False Claims Act and CIAs

OIG, in close coordination with the U.S. Department of Justice (DOJ), pursues federal

false claims cases when sufficient evidence of government fraud exists. Federal false

claims cases may result in exclusion of the defrauding individual or entity, or they may

also result in negotiated settlements with OIG and DOJ. Terms of these settlements can

include a CIA, under which the offender instills procedures and protocols to bring itself

into compliance with federal healthcare program requirements.

Offenders’ compliance with their own CIA is monitored by OIG through Independent

Review Organizations (IROs). CIA monitoring includes site visits and review of

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information submitted by a provider. Failure to comply with a CIA can result in penalties

or exclusion.

Offenders may settle federal false claims cases with the government without entering

into a CIA. Compliance reviews by OIG of such offenders is as extensive as, if not more

so than, CIA monitoring by IROs.

Advisory Opinions and Other Industry Guidance

In response to formal requests for guidance, OIG issues advisory opinions on the

application of healthcare laws to specific factual circumstances. When OIG determines

that certain practices are suspect, it issues fraud alerts and advisory bulletins. Broader

topics are often addressed by Compliance Program Guidance.

Provider Compliance Training

Providers have access to ample compliance training opportunities offered by OIG. Live

training sessions were recently conducted in several major U.S. cities, and one event

was streamed online for free. OIG’s website also contains other training materials,

videos, and podcasts, all targeted toward fighting fraud, waste, and abuse.

Provider Self-Disclosure

Entities that discover internal fraud, waste, or abuse need not wait for a federal

investigation or enforcement action. Rather, providers can voluntarily disclose such

conduct. Self-disclosure allows entities to better negotiate a settlement and potentially

avoid exclusion.

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The Provider Self-Disclosure Protocol outlines the steps necessary to disclose unlawful

conduct. After an initial disclosure, an internal investigation takes place to determine the

reasons behind, and consequences of, the conduct. OIG then reviews the internal

investigation and decides how to proceed regarding settlement or enforcement actions.

Investigative Activities

In FY 2013, OIG will continue to devote significant resources to investigating Medicare

and Medicaid fraud, and work closely on such matters with other law enforcement

partners including the Federal Bureau of Investigation (FBI), the Internal Revenue

Service (IRS), the U.S. Postal Service, and state MFCUs. The Health Care Fraud

Prevention and Enforcement Action Team (HEAT) program will continue to be a key

facet of OIG’s investigative activities. Under HEAT, HHS works with DOJ to facilitate

coordination in investigating Medicare and Medicaid fraud, by among other things

deploying Medicare Strike Force Teams to select districts. These Strike Force Teams,

which are an integral part of HEAT, work together with federal, state, and local law

enforcement to uncover fraud in a variety of proactive ways including the use of data

analytics, and to investigate and prosecute such cases quickly. Once fraud is identified,

OIG and CMS will continue to impose payment suspensions on providers and suppliers

who have been targeted as engaging in potentially fraudulent activity.

OIG investigates a variety of fraud and other misconduct in the healthcare field, such

as:

Overbilling Medicare or Medicaid;

Business practices involving kickbacks or unlawful self-referral by physicians;

Payment claims for services of a sub-standard quality; and

Drug benefit issues.

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Strike Force Teams also work with MFCUs on the state level to investigate Medicaid

fraud.

Part V: Public Health

OIG reviews the activities of numerous public health agencies within HHS. These

agencies include the Agency for Healthcare Research and Quality (AHRQ), the Centers

for Disease Control and Prevention (CDC), FDA, the Health Resources and Services

Administration (HRSA), the Indian Health Service (IHS), the National Institutes of Health

(NIH), and the Substance Abuse and Mental Health Services Administration (SAMHSA).

Significant reviews that will be initiated by OIG in FY 2013 are discussed below.

Oversight of Security of the Strategic National Stockpile for Pharmaceuticals

(CDC)

OIG will begin assessing the CDC’s efforts to secure pharmaceutical stockpiles against

theft, tampering, and other loss.

Award Process for the President’s Emergency Plan for AIDS Relief Cooperative

Agreements (CDC)

OIG will begin reviewing the CDC’s process for awarding cooperative agreements under

the President’s Emergency Plan for AIDS Relief program to ensure compliance with

applicable laws, regulations, and departmental guidance.

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Oversight of HIV/AIDS Prevention and Research Grants (CDC)

OIG will begin evaluating whether the CDC conducted its oversight of HIV/AIDS

prevention and research grants in accordance with federal regulations and HHS

policies.

Grantee’s Use of Funds (CDC)

OIG will begin examining whether CDC grantees receiving FY 2012 HHS appropriations

used the funds for the allowable purposes of healthy lifestyle promotion and chronic

disease reduction.

Oversight of Wholesale Prescription Drug Distributors (FDA)

OIG will begin determining the adequacy of FDA’s oversight of wholesale prescription

drug distributors and the effectiveness of the FDA’s processes for ensuring that states

are licensing wholesalers according to applicable state and federal laws.

Contract Health Services Program’s Compliance with Appropriations Laws (IHS)

OIG will begin evaluating whether IHS adequately oversees the appropriate funding of

its Contract Health Services program, as well as whether the program is in compliance

with the requirements specified in appropriations statutes.

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Equipment Purchases and Extramural Construction Grants (NIH)

OIG will begin determining whether NIH grantees’ claims for equipment purchases at

selected schools comply with the Recovery Act and applicable federal requirements and

determining whether NIH grantees that received extramural constructions grants

complied with appropriate bidding procedures, and with grant, Recovery Act, and

applicable federal requirements on allowable expenditures.

Human Subjects Protection Practices of National Cancer Institute Extramural

Grantees Collecting Biospecimens (NIH)

OIG will begin assessing the extent to which informed consent documents for research

that includes the collection of biospecimens comply with regulations protecting human

subjects, the extent to which Institutional Review Boards (IRBs) overseeing such

research comply with applicable regulations, and the extent to which IRBs and principal

investigators address the unique risks associated with such research.

Select Agent Shipments to and From Foreign Countries

OIG will begin reviewing exports and imports of select agents (biological agents and

toxins that have the potential to pose a several threat to human, animal, or plant health

or to animal or plant products) between U.S. based-entities and foreign countries, which

exports and imports occurred during the time period October 1, 2009 through

September 30, 2011.

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Protections of Human Research Subjects (OHPR)

OIG will begin reviewing the Office for Human Research Protections’ oversight of

institutional compliance with federal requirements protecting the rights, welfare, and

well-being of human subjects involved in HHS conducted or supported research.

Oversight of Laboratory-Developed Tests (HHS)

OIG will begin examining the HHS agencies’ oversight of clinical effectiveness of

laboratory developed tests (LTD), a category of in vitro diagnostics which have typically

been used in research settings only, and determine the how LDTs are being used in

making healthcare decisions and identify regulatory challenges.

OIG also engages in the following Public Health Legal Activities and Investigations:

Public Health Legal Activities (DOJ)

OIG will continue to assist DOJ in resolving civil and administrative fraud cases, in

promoting compliance of HHS grantees, and in developing and pursuing federal false

claims against institutions receiving grants from NIH and other public health service

agencies.

Public Health Investigations—Violations of Select Agent Requirements (CDC, FBI,

and the U.S. Department of Agriculture)

OIG will continue to work with the CDC, FBI, and the U.S. Department of Agriculture to

investigate and impose civil monetary penalties for violations of federal requirements for

the registration, storage, and transfer of select biological agents and toxins by academic

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institutions, commercial manufacturing facilities, and federal, state, and local

laboratories.

Significant ongoing reviews at other agencies include the following:

Early Implementation of Patient Safety Organizations (AHRQ)

OIG will assess the role of patient safety organizations (PSOs) in patient safety

reporting, focusing on the extent of participation among hospitals, and PSO practices

related to analyzing adverse events and generating reports for providers and the

Network of Patient Safety Databases Maintained by AHRQ.

Health Center Adoption of Routine Testing for Human Immunodeficiency Virus

Testing (HRSA)

OIG will determine the extent to which the CDC’s recommendations for routine HIV

testing have been adopted by HRSA-funded health centers, which are critical sources of

access for populations disproportionately affected by HIV.

Community Health Centers’ Compliance with Grant Requirements of the

Affordable Care Act (HRSA)

OIG will evaluate whether community health centers that received funds under the ACA

are complying with applicable federal laws and regulations.

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SAMHSA

OIG will review SAMHSA’s progress in identifying performance goals for the Substance

Abuse Treatment Block Grant program designed to promote effective substance abuse

treatment and recovery and will determine if and to what extent to which states are

reporting and meeting goals.

Additionally, OIG will review grantees’ use of Prevention and Public Health Fund

awards, made pursuant to ACA Section 4002, to determine whether the use of the

funds was in accordance with the purposes stated in the federal award letters and

complied with the program requirements and the ACA regulations.

Part VII: Other HHS-Related Reviews

OIG annually undertakes a number of reviews addressing department-wide issues,

such as financial statement audits; financial accounting; information systems

management; and other departmental issues. OIG plans to continue these activities in

FY 2013.

Some planned reviews of particular concern to healthcare providers are as follows:

Fraud Vulnerabilities Presented by Electronic Health Records

In FY 2012, OIG stated that it planned to “investigate fraud and abuse vulnerabilities in

electronic health records (EHR) systems and seek to determine how certified EHR

systems address these vulnerabilities.” In the FY 2013 Work Plan, OIG states that it will

continue focusing on this issue and lists it as a “work in progress.” This restated focus

comes on the heels of a September 24, 2012 “warning” letter to several hospital

associations from the U.S. Attorney General and HHS. The September 24, 2012 letter

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warned providers against “cutting and pasting” or “cloning” records from different dates

of service or different patients in order to facilitate “upcoding.”

HHS Programs’ Vulnerabilities to Grant Fraud

OIG has identified the review of vulnerability of HHS programs to grant fraud as a new

issue for FY 2013. Specifically, OIG plans to review HHS programs that are vulnerable

to grant fraud. OIG also plans to assess how HHS-awarding agencies mitigate the

potential risks for fraud, abuse, and mismanagement of grant funds. OIG also intends to

look at whether grantees who have exhibited fraudulent or abusive behavior in the past

are able to receive funds from other programs or whether the awarding programs have

mechanisms in place for identifying past fraudulent behavior by grantees. This focus

area will be of particular concern to healthcare providers and organizations receiving

grant money, such as innovation health awards, from CMS as a result of the ACA as

they may be subjected to heightened scrutiny.

Use of Grant Funds for Lobbying Activities

Also with regard to grant funds, OIG plans to examine whether HHS grantees are being

informed of the prohibition of using grant money for lobbying activities. Further, OIG

plans to assess whether the HHS agencies have mechanisms in place for identifying

and addressing violations of this lobbying prohibition.

State Protections for People in Residential Settings Who Have Disabilities

OIG previously recommended that CMS, the Administration for Children and Families,

SAMHSA, and FDA work cooperatively to provide information and technical assistance

to the states for strengthening state protections for people with disabilities living in

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residential settings. CMS now plans to review the actions taken by these agencies and

operating divisions.

*Laura Schattschneider's portion of this article was written prior to her federal service, and the views expressed therein do not necessarily represent the views of the U.S. Department of Health & Human Services or of the United States.

2013 OIG Work Plan Summary © 2012 is published by the American Health Lawyers Association. All rights reserved. No part of this publication may be reproduced in any form except by prior written permission from the publisher. Printed in the United States of America.

Any views or advice offered in this publication are those of its authors and should not be construed as the position of the American Health Lawyers Association. “This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought”—from a declaration of the American Bar Association