HSA 5100 RU Future Trends in US Healthcare Delivery Report

Competency

Appraise the efficiency of primary, secondary, and tertiary care in the U.S. healthcare delivery system.

Scenario

You are the newly appointed director of the Center for Medicare and Medicaid Services (CMS). With healthcare costs continuing to soar, the Medicare Modernization Act (MMA) rollout and Medicare Prescription Drug Improvement Plan in place, and the possible changes of the Affordable Care Act in progress, you are confronted with potential increases in payments for Medicare and Medicaid programs.

You are trying to understand how to best prepare the agency for the changes so that the efficiency of healthcare delivery is not compromised. As a courtesy, the Director for the Administration on Aging continues to send you data about the predicted rise in the number of older people and those with disabilities. Data is also sent on the forecasted needs of such persons for comprehensive care, not just acute care.

Instructions

Create a trends forecast outlining the possible changes (trends) that may affect efficiency and delivery in primary, secondary, and tertiary care in the U.S. healthcare delivery system over the next 10 years.

The trends forecast should be in the form of a report used by such agencies as CMS, OIG, DHHS and include a Table of Contents, Introduction/Background, Appendices (if applicable), Executive Summary, Charts/Graphs (if applicable), and References. Be sure to include at least 5 references (e.g., government websites or scholarly articles) and cite your sources using APA format. Your trends forecast should include (at a minimum, but not limited to) the criteria below:

Outline the organizations and institutions that deliver care across the continuum including primary, secondary, and tertiary care providers that will be impacted over the next 10 years by changes in the U.S healthcare delivery system.

Appraise and describe how well primary, secondary and tertiary care providers deliver care to patients using preventative medicine, based on the current climate in healthcare.

Detail the impact of the changing consumer demographics will have on long-term care.

Explain how this focus will impact providers operationally.

Detail how CMS can expect facilities to focus on quality and outcomes relating to long-term care, based on the statistics from the Director of Administration on Aging.

Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
A MESSAGE FROM
THE INSPECTOR GENERAL
I am pleased to present this Semiannual Report to Congress summarizing activities of the Office of
Inspector General (OIG), Department of Health and Human
Services (HHS or the Department), for the
6-month period that ended September 30, 2017. OIG’s
mission is to protect the integrity of HHS programs and the
health and welfare of the people they serve. We accomplish
our mission by preventing and detecting fraud, waste, and
abuse; identifying opportunities to increase the efficiency
and effectiveness of HHS programs; and holding
accountable those who do not meet program requirements
or who violate Federal laws.
Our work during this reporting period reflects our
heightened attention to delivering high-impact results while
streamlining our approach to oversight. Data and our
growing data analytics capabilities played a significant role
in these efforts. We continue to cultivate a workforce with
the skills and talents to excel in a data-driven oversight
environment. This strategy is paying dividends for the
American public. By leveraging advanced analytic
techniques to detect potential vulnerabilities and fraud trends, we are better able to target our resources
at those areas and individuals most in need of oversight, leaving others free to provide care and services
without unnecessary disruption. In July 2017, OIG and its law enforcement partners conducted the largest
National Health Care Fraud Takedown in history. Sophisticated data analytics were critical. The end
result—charges against more than 400 defendants in 41 Federal districts related to schemes involving
about $1.3 billion in false billings to Medicare and Medicaid—protected the programs and sent a strong
signal that theft of taxpayer funds will not be tolerated. Notably, 120 defendants, including doctors, were
charged for their roles in prescribing and distributing opioids and other dangerous narcotics, and 295
individuals were served with exclusion notices for conduct related to opioid diversion and abuse. Also in
July we published a data brief describing concerns about extreme use and questionable prescribing of
opioids in Medicare Part D.
Our heightened focus on prescription drug abuse, including the serious problem of opioid abuse,
continues. Other continuing priorities include improving the safety and quality of children’s services;
strengthening care in noninstitutional settings, including home health care; and enhancing Medicaid
program integrity. Looking forward, we anticipate our work to grow in key areas such as grants
management, mental health services, managed care programs and value-based care, and the quality and
safety of programs serving American Indian and Alaska Native beneficiaries. We will look at common
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
issues across all of these areas, including issues related to information technology, cybersecurity, and the
completeness, accuracy, and timeliness of data.
Since Congress established OIG in 1976, we have worked collaboratively with our partners to protect and
oversee HHS’s vital health and human services programs. This collaboration across Federal agencies and
among Federal, State, and local governments has never been more crucial or more fruitful. We remain
open to appropriate opportunities to collaborate with the private sector to advance shared interests in
effective, efficient, economical programs. We are adapting to an ever-evolving health and human services
landscape. Today, as a modern OIG, we are using data and technology in innovative ways to enhance and
target our oversight efforts. But none of the achievements of this office would be possible without the
dedication and professionalism of OIG’s employees. Once again, I would like to express my appreciation
to Congress and to the Department for their sustained commitment to the important work of our office.
Daniel R. Levinson
Inspector General
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
TABLE OF CONTENTS
OIG’s Approach To Driving Positive Change
Highlights of OIG Accomplishments
OIG Participation in Congressional Hearings
1
4
11
Selected Acronyms and Abbreviations
12
Oversight Activities by Program Area
14
Centers for Medicare & Medicaid Services
14
Legal and Investigative Activities Related to the Medicare and Medicaid Programs
31
Public Health Agencies
47
Other HHS-Related Reviews and Investigations
56
Appendices
A: Questioned Costs and Funds To Be Put to Better Use
B: Savings Decisions Supported by OIG Recommendations
C: Peer-Review Results
D: Summary of Sanction Authorities
E: Reporting Requirements in the Inspector General Act of 1978
F: Reporting Requirements in the Inspector General Empowerment Act of 2016
G: Anti-Kickback Statute―Safe Harbors
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73
76
78
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
OIG’s Approach to Driving
Positive Change
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS or Department) Office of
Inspector General (OIG) provides independent and objective oversight that promotes
economy, efficiency, and effectiveness in HHS programs and operations. OIG’s program
integrity and oversight activities are shaped by legislative and budgetary requirements and
adhere to professional standards established by the Government Accountability Office
(GAO), the Department of Justice (DOJ), and the Inspector General community. Through
a nationwide network of audits, investigations, and evaluations, OIG carries out its mission
to protect the integrity of HHS programs and the health and welfare of the people served
by those programs. OIG’s work is conducted by three operating components—the Office
of Audit Services, the Office of Evaluation and Inspections, and the Office of
Investigations—with assistance from the Office of Counsel to the Inspector General and
Executive Management.
OIG Organization
The Office of Audit Services (OAS). OAS conducts audits of HHS programs and operations
through its own resources or by overseeing audit work done by others. Audits examine the
performance of HHS programs and/or of HHS’s grantees and contractors in carrying out
their respective responsibilities and provide independent assessments of HHS programs
and operations. These assessments help reduce waste, abuse, and mismanagement and
promote the economy, efficiency, and effectiveness of programs and operations
throughout HHS.
The Office of Evaluation and Inspections (OEI). OEI conducts national evaluations to
provide HHS, Congress, and the public with timely, useful, and reliable information on
significant issues. These evaluations focus on preventing fraud, waste, and abuse and
promoting economy, efficiency, and effectiveness in HHS programs. OEI reports also
present practical recommendations for improving program operations.
The Office of Investigations (OI). OI conducts criminal, civil, and administrative
investigations of fraud and misconduct related to HHS programs, operations, and
beneficiaries. With investigators working in almost every State, the District of Columbia,
and Puerto Rico, OI coordinates with DOJ and other Federal, State, and local law
enforcement authorities. OI also coordinates with OAS and OEI when audits and
evaluations uncover potential fraud. OI’s investigative efforts often lead to criminal
convictions, administrative sanctions, or civil monetary penalties (CMPs).
The Office of Counsel to the Inspector General (OCIG). OCIG provides legal services to
OIG, rendering advice and opinions on HHS programs and operations and providing all
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
legal support for OIG’s internal operations. OCIG represents OIG in all civil and
administrative fraud and abuse cases involving HHS programs, including False Claims Act
(FCA), program exclusion, self-disclosure, and CMP cases. In connection with these cases,
OCIG also negotiates and monitors corporate integrity agreements (CIAs). OCIG renders
advisory opinions, issues compliance program guidance, publishes fraud alerts, and
provides other guidance to the health care industry about the anti-kickback statute and
other OIG enforcement authorities.
Executive Management (EM). EM is composed of the Immediate Office of the Inspector
General and the Office of Management and Policy. EM is responsible for coordinating OIG
activities and providing mission support, including setting vision and direction for OIG’s
priorities and strategic planning; ensuring effective management of budget, finance, human
resource management, and other operations; and serving as a liaison with HHS, Congress,
and other stakeholders. EM plans, conducts, and participates in a variety of cooperative
projects within HHS and with other Government agencies. EM provides critical data
analytics, data management, and information technology (IT) infrastructure that enables
OIG components to conduct their work efficiently and effectively.
OIG Strategic
Publications
HHS OIG Strategic Plan
As delineated in OIG’s Strategic Plan for 2014-2018, OIG’s approach to protecting the
integrity of HHS programs has four key goals: (1) to fight fraud, waste, and abuse; (2) to
promote quality, safety, and value; (3) to secure HHS programs’ future; and (4) to advance
excellence and innovation. These goals drive OIG’s work planning for audits and
evaluations as well as OIG’s approach to enforcement. These goals also serve as a starting
point for OIG’s own assessment of its effectiveness.
Top Management Challenges Facing HHS
To focus the Department’s attention on the most pressing issues, each year OIG identifies
the Top Management and Performance Challenges facing the Department. These top
challenges arise across HHS programs, and they cover critical HHS responsibilities that
include delivering quality services and benefits; exercising sound fiscal management;
safeguarding public health and safety; and enhancing cybersecurity.
OIG Work Plan
OIG’s Work Plan sets forth various projects that OIG plans to undertake during the fiscal
year (FY) and beyond. Projects listed in the Work Plan span the Department’s operating
divisions, which include the Centers for Medicare & Medicaid Services (CMS); public health
agencies such as the Centers for Disease Control and Prevention (CDC) and the National
Institutes of Health (NIH); and human services agencies such as the Administration for
Children and Families (ACF) and the Administration for Community Living (ACL). The Work
Plan also includes oversight of State and local governments’ use of Federal funds as well as
the administration of the Department. Some of the projects described in the Work Plan are
statutorily required.
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Compendium of Unimplemented Recommendations
OIG drives positive change not only by identifying risks, problems, abuses, and deficiencies,
but also by recommending solutions to address them. OIG maintains a list of
recommendations it has made to address vulnerabilities detected in its reviews, and it
keeps track of whether these recommendations have been implemented. OIG
systematically follows up on its recommendations with the relevant HHS programs. From
among the recommendations that have not been implemented, OIG identifies the top
recommendations that, if implemented, are likely to garner significant savings and
improvements in quality, efficiency, and effectiveness. OIG compiles these
recommendations in the Compendium of Unimplemented Recommendations.
HHS OIG’s Semiannual Report to Congress
HHS OIG’s Semiannual Report(s) to Congress (Semiannual Reports) describe OIG’s work on
identifying significant problems, abuses, deficiencies, remedies, and investigative outcomes
relating to the administration of HHS programs and operations that were disclosed during
the reporting period. In the report below, we present OIG expected recoveries, criminal
and civil actions, and other statistics as a result of our work for the entire FY 2017. We also
highlight some of our work completed during this semiannual reporting period, April 1,
2017, through September 30, 2017.
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Highlights of OIG Accomplishments
HHS OIG’S SEMIANNUAL REPORT TO CONGRESS (Semiannual Report) describes OIG’s
work identifying significant risks, problems, abuses, deficiencies, remedies, and investigative
outcomes relating to the administration of HHS programs and operations that were
disclosed during the reporting period. In the highlights section below, we present OIG
expected recoveries, criminal and civil actions, and other statistics as a result of our work for
the entire FY 2017. We also highlight our most significant work completed during this
semiannual reporting period, April 1, 2017, through September 30, 2017.
Fighting Fraud in OIG remains at the forefront of the Nation’s efforts to fight fraud in HHS programs and
HHS Programs― hold wrongdoers accountable for their actions. Not only does fraud increase HHS costs, it
increases risk and potential harm to beneficiaries. During FY 2017, OIG reported the
Highlights of
following.
Enforcement
Accomplishments
To
combat health care fraud, OIG partners with DOJ; the State Medicaid Fraud Control Units
(MFCUs or Units); and other Federal, State, and local law enforcement agencies. These
partnerships include the Medicare Fraud Strike Force teams, which detect, investigate, and
prosecute health care fraud through a coordinated and data-driven approach. Since its
inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500
defendants who collectively have falsely billed the Medicare program for over $12.5 billion.
The following examples highlight some of our significant enforcement accomplishments
during this semiannual reporting period.
OIG and partners executed the largest national health care fraud takedown
in history. In July 2017, OIG and our Federal and State law enforcement partners led the
largest health care fraud takedown in history. More than 400 defendants in 41 Federal
districts were charged with participating in fraud schemes involving about $1.3 billion in
false billings to Medicare and Medicaid.
Texas doctor sentenced to 35 years, $268 million in restitution for massive
home health fraud scheme. Dr. Jacques Roy was sentenced to 35 years in prison and,
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
jointly and severally with his co-defendants, ordered to pay $268.1 million in restitution
following his conviction on several counts of health care fraud. OIG’s investigation found
that Roy and his co-defendants were involved in a large-scale, sophisticated scheme to
improperly recruit patients and bill Medicare for unnecessary home health services.
Drug manufacturer agreed to pay $465 million and entered into corporate
integrity agreement to resolve allegations of improper drug classification.
Mylan Inc. and Mylan Specialty L.P. (collectively, Mylan) agreed to pay $465 million to
resolve FCA liability associated with allegations that Mylan improperly classified EpiPen as a
generic drug for purposes of the Medicaid drug rebate program, resulting in underpaid
rebates to Medicaid and overcharges to covered entities participating in the 340B Drug
Discount Program. Mylan also entered into a 5-year CIA with OIG.
Vendor of electronic health record software agreed to pay $155 million to
settle false claims allegations. eClinicalWorks, LLC (ECW), and three of its senior
executives agreed to pay $155 million for allegedly causing health care providers to submit
false claims in connection with the Medicare and Medicaid Electronic Health Record
Incentive Programs by concealing from ECW’s customers that ECW’s software did not
comply with the requirements for “meaningful use” certification. ECW also entered into
a 5-year CIA with OIG.
Health center CEO sentenced to 18 years for fraud scheme.
Jonathan Wade Dunning, CEO of Birmingham Health Center, was convicted on 98 counts
related to his embezzlement of Federal grant funds. Dunning was sentenced to 18 years in
prison and ordered to pay $13.5 million in restitution. He and his nine companies were also
debarred for 10 years.
Addressing the opioid abuse epidemic is a top priority for OIG. OIG has a longstanding
Curbing the
Opioid Epidemic and extensive history of investigative and oversight work focused on the alarming problem
of prescription drug abuse, including opioids, as well as non-controlled substances that are
often abused along with opioids (known as “potentiators”). We investigate opioid fraud
and diversion cases and use advanced data analytics and tools to detect suspected
problems for further review. Our work focuses on strengthening the integrity of HHS
prescription drug and addiction treatment programs and protecting at-risk beneficiaries.
Highlights from this semiannual reporting period include the following.
National takedown included largest number of opioid-related defendants.
OIG, along with our State and Federal law enforcement partners, participated in an
unprecedented nationwide health care fraud takedown in July 2017. The takedown
included opioid-related charges against 120 individuals—the largest number ever in
a health care fraud takedown. The defendants included 27 doctors. In addition, OIG issued
295 exclusion notices related to the use and abuse of controlled substances.
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
OIG identified concerns about extreme use and questionable prescribing of
opioids in Medicare Part D. In 2016, half a million beneficiaries received high
amounts of opioids through Medicare Part D, and almost 90,000 of them were at serious
risk of opioid misuse or overdose. Moreover, 401 prescribers had questionable prescribing
patterns for the beneficiaries at serious risk. OIG and CMS are taking appropriate actions
with respect to these prescribers. (See OIG’s report, OEI-02-17-00250.)
Pennsylvania doctor sentenced to 25 years for charges related to improper
prescribing. Dr. Jeffrey Bado was convicted of 307 felony counts, including maintaining a
drug-involved premises, drug distribution resulting in a death, health care fraud, and
making false statements to Federal agents. Bado was sentenced to 25 years in prison.
Fraudulent medical practice and pharmacy co-conspirators sentenced.
Three co-conspirators connected with health care provider Compassionate Doctors, PC,
were convicted of charges resulting from their involvement in an unlawful prescription drug
operation. The defendants—owner Sardar Ashrafkhan, Dr. Adelfo Pamatmat, and
pharmacist Nadeem Iqbal—were sentenced to a combined 46 years and 4 months in
prison and ordered to pay $10.7 million in restitution.
Protecting
Vulnerable
Beneficiaries in
Nursing Homes
and NonInstitutional
Settings
OIG’s goal to promote quality, safety, and value includes a focus on protecting Medicare
and Medicaid beneficiaries from substandard care, abuse, and neglect. We direct particular
oversight attention to those who may be especially vulnerable to these risks, such as
nursing home residents and beneficiaries with developmental disabilities who receive care
from community-based providers. Significant OIG work during this semiannual period
includes the following.
OIG uncovered over 100 instances of potential abuse or neglect of
Medicare beneficiaries in skilled nursing facilities (SNFs). OIG’s review of
records from emergency room visits by Medicare beneficiaries residing in SNFs indicates
that the injuries of 134 beneficiaries may have resulted from potential abuse or neglect.
More than a quarter of these incidents may not have been reported to law enforcement at
the time. OIG has referred all 134 incidents to appropriate law enforcement officials and
CMS and suggested immediate actions for CMS to better protect beneficiaries. (See OIG’s
early alert, A-01-17-00504.)
OIG identified deficiencies in Maine’s oversight of critical incidents
involving Medicaid beneficiaries with developmental disabilities. Maine failed
to demonstrate that it has a system to ensure the health, welfare, and safety of its
beneficiaries with developmental disabilities who are covered by its Medicaid waiver
program. OIG found—among other problems—that Maine did not ensure that providers
reported and reviewed all critical incidents; did not investigate and immediately report to
law enforcement all incidents involving suspected abuse, neglect, or exploitation; and did
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Department of Health and Human Services Office of Inspector General
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not ensure appropriate reporting, analysis, and investigation of all beneficiary deaths. (See
OIG’s report, A-01-16-00001.)
Protecting the
Health and
Safety
of Children in
HHS Programs
OIG also prioritizes the health and safety of children served by HHS programs in directing
our work toward our goal to promote health, safety, and value. Many of HHS’s programs
for children are operated by States and some require coordination with other agencies.
During this reporting period, OIG’s work included the following oversight of such programs.
OIG found that two States did not always properly handle allegations and
referrals of abuse and neglect of children in foster care. In audits of Texas and
California, OIG found that neither State always ensured that allegations and referrals of
abuse and neglect of children in the Title IV-E foster care program were recorded and
investigated. Further, California also did not always ensure that all such allegations and
referrals were resolved. (See OIG’s reports on Texas, A-06-15-00049, and California, A-0916-01000.)
OIG noted improvements in the HHS Office of Refugee Resettlement’s
(ORR) coordination and outreach to protect unaccompanied alien children.
OIG assessed HHS’s progress in working with the Department of Homeland Security (DHS)
to clarify their respective roles and responsibilities related to unaccompanied alien children
after their release to sponsors, as OIG had recommended in 2008. We found that HHS and
DHS have improved coordination and that ORR has increased its contact with the children
and their sponsors after children are released from HHS custody. (See OIG’s report,
OEI-09-16-00260.)
Improving
Financial
Management
and Reducing
Improper
Payments in
Medicare
OIG has identified reducing improper payments as a departmental priority necessary to
ensuring the long-term health of HHS programs, especially Medicare. Highlights from this
semiannual reporting period include the following.
OIG identified more than $700 million in improper Medicare incentive
payments designed to promote the adoption of electronic health records
(EHR). In an audit of Medicare EHR incentive payments, OIG estimated that CMS paid
$729.4 million to providers who did not meet Federal requirements for “meaningful use.”
CMS also made $2.3 million in incentive payments for the wrong payment year when
providers switched between incentive programs. (See OIG’s report, A-05-14-00047.)
OIG recommended ways to improve recovery of Medicare overpayments
identified by integrity contracts. OIG found that although CMS had improved its
recovery rate since 2010 (7 percent collected), only 20 percent of the $482 million in
overpayments sought for collection based on integrity contractor referrals in 2014 were
recouped, leaving $386 million uncollected. OIG recommended several improvements to
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Department of Health and Human Services Office of Inspector General
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contractors’ overpayment identification, collection, and tracking. (See OIG’s report, OEI-0313-00630.)
OIG found that data shortcomings may increase Medicare’s and
beneficiaries’ costs for recalled and failed devices. Limitations in claims data
impede CMS’s ability to readily identify and effectively track Medicare’s total costs related
to the replacement of devices that were recalled or that failed prematurely. We estimated
these costs totaled $1.5 billion for Medicare and $140 million for beneficiaries over the 10year period ending on December 31, 2014, for seven recalled and prematurely failed cardiac
devices. By including medical device-specific information on the claim forms, CMS could
reduce Medicare and beneficiary costs by identifying poorly performing devices more
quickly, which could also improve beneficiaries’ chances of receiving appropriate followup
care more quickly. (See OIG’s report, A-01-15-00504.)
In support of OIG’s goal to promote value, we assess HHS programs aimed at improving
Overseeing
Programs Aimed quality while reducing costs. During this semiannual period, OIG’s work in this area
included the following.
at Improving
Quality and
OIG found that the Medicare Shared Savings Program (MSSP) shows
Reducing
potential to reduce spending and improve quality. Most Accountable Care
Costs
Organizations (ACOs) in the MSSP were able to reduce spending and improve quality of
care during the first 3 years of the program. A small subset of these ACOs showed
substantial reductions in Medicare spending for key services. (See OIG’s report, OEI-02-1500450.)
OIG found that CMS validated hospital-reported data on quality, but
should use additional tools to identify gaming. CMS was validating hospital
inpatient quality reporting data (used to adjust payments based on quality measures)
according to the process it established in regulation, and most hospitals passed the
validation. However, CMS made limited use of analytics, leaving it less likely to identify
patterns that may indicate gaming of the data by hospitals. (See OIG’s report,
OEI-01-15-00320.)
Protecting the
Integrity of the
Medicaid
Program
Protecting the integrity of Medicaid is another key focus area in OIG’s goal to fight fraud,
waste, and abuse. We make recommendations to CMS and States to correct problems and
mitigate program risks, and we work closely with State Medicaid Fraud Control Units to
combat Medicaid fraud. Highlights of OIG’s work during this reporting period include the
following.
OIG identified continued concerns about national Medicaid data. Complete,
accurate, and timely national data are essential for effective administration and oversight of
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Department of Health and Human Services Office of Inspector General
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Medicaid; however, OIG identified continued concerns with the national Medicaid database
known as T-MSIS. States and CMS reported challenges to States’ submitting data to TMSIS, CMS has postponed reporting deadlines multiple times, and CMS and States
reported concerns about the completeness and reliability of submitted data. (See OIG’s
report, OEI-05-15-00050.)
OIG found that Kentucky did not always determine Medicaid eligibility in
accordance with Federal and State requirements. We estimated that Kentucky
made Federal Medicaid payments on behalf of 69,931 potentially ineligible beneficiaries
totaling $72.8 million. (See OIG’s report, A-04-16-08047.)
OIG found that challenges limit States’ use of Medicaid payment
suspension. Payment suspensions are a program integrity tool for States to stop
Medicaid payments as early as possible when there is a credible allegation of fraud against
a provider. However, we found that most States imposed 10 or fewer suspensions in all of
FY 2014, and States reported significant challenges with imposing payment suspensions.
(See OIG’s report, OEI-09-14-00020.)
OIG initiated enhanced efforts to maximize the effectiveness of Medicaid
Fraud Control Units. MFCUs play a primary role for Medicaid in investigating and
prosecuting provider fraud as well as patient abuse or neglect in health care facilities. OIG
collaborates with the MFCUs on joint cases and investigative initiatives and has oversight
responsibility for MFCU operations. Supporting MFCU effectiveness is one of OIG’s top
priorities. During the semiannual reporting period, OIG piloted a new risk-based onsite
review process, provided training for MFCU managers and staff, and partnered with 31
MFCUs in the July 2017 national health care fraud takedown.
Ensuring
Integrity and
Quality in
Programs
Serving
American
Indians and
Alaskan Natives
OIG has focused significant attention on improving quality and integrity in HHS programs
serving American Indians and Alaskan Natives (AI/AN). This includes improving the quality
of care, management, and infrastructure of the Indian Health Service (IHS); combating fraud
and misuse of funds; and ensuring adequate internal controls and training for AI/AN
grantees. Highlights during this reporting period include the following.
OIG led training on quality of care, compliance, and combating fraud and
abuse in programs serving AI/AN. In April 2017, OIG conducted a training program
for IHS and tribal officials on health care and grants management compliance in South
Dakota. The sessions focused on quality of care and service delivery, compliance programs
and other tools for combating fraud and abuse, internal controls, and single audits.
In audits of two tribes, OIG identified improper administration of LowIncome Home Energy Assistance Program (LIHEAP) grant funds. Grant funds
totaling $1.2 million for one tribe and almost $600,000 for the other tribe were not
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Department of Health and Human Services Office of Inspector General
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administered in compliance with Federal laws, regulations, and guidance. These funds
could have been used to provide additional benefits to eligible LIHEAP beneficiaries. Errors
occurred because of insufficient internal controls, and in some cases, because staff
circumvented existing internal controls. (See OIG reports on the Three Affiliated Tribes, A07-16-04230, and the Turtle Mountain Band of Chippewa Indians, A-07-16-04233.)
Tribal member convicted of theft of federally provided welfare benefits,
ordered to pay $30,000 in restitution, and debarred for 3 years. James Leroy
Emerson stole Temporary Assistance for Needy Families (TANF) and Supplemental
Nutrition Assistance Program (SNAP) Tribal funds when he applied for and received benefit
payments from the Blackfeet Tribe from 2007 through 2010, even though he was ineligible.
He was convicted of theft of federally provided welfare benefits by fraud, Federal welfare
assistance fraud, and theft from an Indian tribal organization, and ordered to pay $30,000
in restitution. Emerson was also debarred for a period of 3 years following an OIG referral
to HHS.
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
OIG Participation in Congressional Hearings
05/02/2017
Testimony of Christi A. Grimm, Chief of Staff,
Office of Inspector General, U.S. Department
of Health and Human Services
“Combating Waste, Fraud, and Abuse
in Medicaid’s Personal Care Services
Program,” House Committee on
Energy and Commerce; Subcommittee
on Oversight and Investigations
07/18/2017
Testimony of Erin Bliss, Assistant Inspector
General for Evaluation and Inspections,
Office of Inspector General, U.S. Department
of Health and Human Services
“Examining HRSA’s Oversight of the
340B Drug Pricing Program,” House
Committee on Energy and Commerce;
Subcommittee on Oversight and
Investigations
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Department of Health and Human Services Office of Inspector General
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Selected Acronyms and Abbreviations
ACA
Patient Protection and Affordable Care Act
ACF
Administration for Children and Families
ACL
Administration for Community Living
ACO
Accountable Care Organizations
AMP
average manufacturer price
ASP
average sales price
CDC
Centers for Disease Control and Prevention
CIA
corporate integrity agreement
CMP
civil monetary penalty
CMS
Centers for Medicare & Medicaid Services
DHS
Department of Homeland Security
DOJ
Department of Justice
EHR
electronic health records
EMTALA
Emergency Medical Treatment and Labor Act
FCA
False Claims Act
FDA
Food and Drug Administration
FMAP
Federal medical assistance percentage
FPS
Fraud Prevention System
FY
fiscal year
GAO
Government Accountability Office
HCBS
home- and community-based services
HHS
Department of Health and Human Services
HIPAA
Health Insurance Portability and Accountability Act of 1996
HRSA
Health Resources and Services Administration
IHS
Indian Health Service
IT
information technology
LIHEAP
Low-Income Home Energy Assistance Program
MAC
Medicare Administrative Contractor
MCO
managed care organization
MFCU
Medicaid Fraud Control Unit
NIH
National Institutes of Health
OAS
Office of Audit Services
OCIG
Office of Counsel to the Inspector General
OEI
Office of Evaluation and Inspections
OI
Office of Investigations
OIG
Office of Inspector General
12
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
OMB
Office of Management and Budget
PCS
personal care services
PSC
Program Safeguard Contractors
SAMHSA
Substance Abuse and Mental Health Services Administration
SNAP
Supplemental Nutrition Assistance Program
SNF
skilled nursing facility
UPIC
Unified Program Integrity Contractor
ZPIC
Zone Program Integrity Contractor
13
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Centers for Medicare & Medicaid Services
Medicare Program Reports and Reviews
Financial Management and Improper Payments
Enhancements Needed in the Tracking and Collection of Medicare Overpayments
Identified by ZPICs and PSCs (OEI-03-13-00630), September 2017
Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs)
referred a total of $559 million in overpayments to Medicare Administrative Contractors
(MACs) in FY 2014; however, the dollar amounts referred varied widely across ZPICs and
PSCs. MACs did not collect 80 percent of the $482 million they sought to collect from
these overpayment referrals. MACs’ collection rates varied, depending on the type of
claim, with home health and hospice overpayments having a collection rate of just
11 percent. Furthermore, ZPICs, PSCs, and MACs continued to experience challenges in
tracking referrals and collections of overpayments. Because CMS began transitioning PSCs
and ZPICs to Unified Program Integrity Contractors (UPICs) in 2016, our recommendations
included these new contractors.
CMS concurred with the following recommendations:
•
•
•
•
share best practices across ZPICs and UPICs and address challenges that hinder
their identification of overpayments;
identify strategies to increase MACs’ collection of ZPIC- and UPIC-referred
overpayments;
work with ZPICs, UPICs, and MACs to create a standard report format both for
overpayment referral reports and overpayment collection reports; and
require ZPICs, UPICs, and MACs to use a unique identifier for each overpayment.
CMS did not state whether it concurred or did not concur with our recommendation to
implement the surety bond requirement for home health and consider the feasibility of
requiring surety bonds for other providers based on their level of risk.
Medicare Inappropriately Paid Acute-Care Hospitals for Outpatient Services They
Provided to Beneficiaries Who Were Inpatients of Other Facilities (A-09-16-02026),
September 2017
Medicare did not appropriately pay acute-care hospitals any of the $51.6 million for
outpatient services that we reviewed, and beneficiaries were held responsible for
unnecessary deductibles and coinsurance of $14.4 million. Generally, Medicare should not
pay an acute-care hospital for outpatient services provided to an inpatient of another
facility. The services should be provided under arrangements between the two facilities,
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
and Medicare should pay the inpatient facility for all the services provided to
the beneficiary.
Medicare overpaid the acute-care hospitals because the system edits that should have
prevented or detected the overpayments were not working properly. If the system edits
had been working properly since 2006, Medicare could have saved almost $100 million, and
beneficiaries could have saved $28.9 million in deductibles and coinsurance.
CMS concurred with our recommendations that it do the following: direct the Medicare
contractors to recover the $51.6 million in identified improper payments to acute-care
hospitals in accordance with CMS’s policies and procedures; instruct the acute-care
hospitals to refund beneficiaries up to $14.4 million in deductible and coinsurance amounts
that may have been incorrectly collected from them or from someone on their behalf;
identify and recover any improper payments to acute-care hospitals after our audit period;
correct the system edits to prevent overpayments to acute-care hospitals; and instruct the
Medicare contractors to more effectively educate acute-care hospitals not to bill Medicare
for outpatient services they provided to beneficiaries who were inpatients of other facilities.
Vulnerabilities Remain in Medicare Hospital Outlier Payments (A-07-14-02800),
September 2017
The summarized results of our reviews of individual Medicare contractors revealed that for
the period of October 2003 through March 2011, Medicare contractors did not always refer
cost reports that qualified for reconciliation, and CMS did not always ensure that Medicare
contractors reconciled the outlier payments associated with cost reports that had been
referred. Our previous reviews identified 465 cost reports that qualified for reconciliation of
outlier payments.
CMS concurred with our recommendations that it ensure that the Medicare contractors are
continuing to take the corrective actions that we recommended in our previous series of
reviews and that it maintain a system that identifies and tracks all cost reports Medicare
contractors have referred for reconciliation and that it recalculates outlier payments on the
basis of claim submissions made by hospitals.
CMS did not directly agree or disagree with our recommendations that it (1) determine
whether the cost reports that had exceeded the 3-year reopening limit may be reopened
and, if so, that it work with the Medicare contractors to reopen them, and (2) ensure that
the Medicare contractors review all cost reports submitted since the end of the audit
periods in our previous reviews and ensure that those whose outlier payments qualified for
reconciliation are correctly identified, referred, and reconciled in accordance with Federal
guidelines.
Shortcomings of Device Claims Data Complicate and Potentially Increase Medicare Costs
for Recalled and Prematurely Failed Devices (A-01-15-00504), September 2017
15
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
We determined that the lack of medical device-specific information on the claim forms,
along with the limited use of relevant condition codes, impedes CMS’s ability to readily
identify and effectively track Medicare’s total costs related to the replacement of recalled or
prematurely failed devices. Using claims data and other data in complex and laborintensive auditing procedures, we estimated that services related to the replacement of
seven recalled and prematurely failed medical devices cost Medicare $1.5 billion and
accrued $140 million in beneficiary copayment and deductible liabilities during calendar
years 2005 through 2014. By including medical device-specific information on the claim
forms, CMS could more effectively identify and track Medicare’s aggregate costs related to
recalled or prematurely failed devices. This could help reduce Medicare costs by identifying
poorly performing devices more quickly, which could also protect beneficiaries from
unnecessary costs and improve their chances of receiving appropriate followup care more
quickly.
CMS stated that it is taking under consideration our recommendation that it continue to
work with the Accredited Standards Committee X12 to ensure that the medical devicespecific information is included on the next version of claims forms.
CMS concurred with our recommendation “in cases where payment is impacted” that it
require hospitals to use appropriate condition codes on claims for reporting a device
replacement procedure.
Wisconsin Physicians Service Insurance Corporation Claimed Unallowable Medicare Part
A Administrative Costs for Fiscal Year 2012 (A-05-15-00046), September 2017 and
Wisconsin Physicians Service Insurance Corporation Claimed Unallowable Medicare Part
B Administrative Costs for Fiscal Year 2012 (A-05-15-00047), September 2017
Wisconsin Physicians Service Insurance Corporation (WPS) claimed $2.5 million in
unallowable Medicare Part A and B administrative costs for Federal FY 2012. CMS
contracted with WPS, which was a Part A fiscal intermediary for selected providers in 49
States and was a Part B carrier for Illinois, Michigan, Minnesota, and Wisconsin. CMS
requested that we audit WPS’s Medicare final administrative cost proposal (FACP) for
Federal FY 2012.
WPS concurred with our findings in Parts A and B on unallowable lobbying salaries, dues,
and donations totaling $15,874 ($7,590 in Part A and $8,284 in Part B) and provided limited
comments on our recommendations for procedural improvements for Parts A and B.
WPS did not concur with our recommendations for Parts A and B that it reduce its FACP by
$2.5 million ($1.2 million in Part A and $1.3 million in Part B) related to unallowable residual
home office expenses; employee incentive program bonuses and related Federal Insurance
Contributions Act (FICA) taxes; and salary allocations.
Fox Rehabilitation Claimed Unallowable Medicare Part B Reimbursement for Outpatient
Therapy Services (A-02-16-01004), August 2017
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Medicare Part B covers outpatient therapy services, including occupational, physical, and
speech therapy. Fox Rehabilitation (Fox), headquartered in New Jersey, was among the
largest providers of outpatient therapy services in the country from July 2013 through June
2015.
We estimated that Fox improperly received at least $29.9 million in Medicare
reimbursement for services that did not comply with certain Medicare requirements. For 85
of the 100 claims in our random sample, Fox improperly claimed Medicare reimbursement
for outpatient therapy services. From our medical review, we determined that all 85 claims
had services that were not medically necessary. For nearly all of these claims, the amount,
frequency, and duration of services were not reasonable and consistent with acceptable
standards of practice. Further, some services did not require the skills of a licensed
therapist or were not an effective treatment for the Medicare beneficiary’s condition.
Fox disagreed with our recommendation that it refund $29.9 million to the Federal
Government and ensure that outpatient therapy services are provided and documented in
accordance with Medicare requirements.
Medicare Paid Hundreds of Millions in Electronic Health Record Incentive Payments to
Noncompliant Eligible Professionals (A-05-14-00047), June 2017
As an incentive for using certified EHR technology, the Federal Government makes
payments to eligible professionals (EPs) and hospitals that attest to the “meaningful use” of
EHRs. After reviewing a random sample of EPs who received at least one EHR incentive
payment from May 2011 through June 2014, we estimated that CMS paid $729.4 million in
Medicare incentive payments to EPs who did not comply with Federal meaningful-use
requirements. CMS also made $2.3 million in incentive payments that were made for the
wrong payment year when EPs switched between Medicare and Medicaid incentive
programs.
CMS concurred with our recommendations that it recover payments made to the sampled
EPs who did not comply with meaningful-use requirements, educate EPs on documentation
requirements, recover $2.3 million made to EPs after they switched programs, and use
computer edits to ensure that an EP does not receive payments under both EHR incentive
programs for the same program year.
CMS partially concurred with our recommendations that it review incentive payments to
determine which EPs did not meet meaningful-use measures for each applicable program
year to attempt recovery of the $729.4 million, and that it review a random sample of EPs’
documentation supporting their self-attestations to identify inappropriate incentive
payments that may have been made after the audit period.
17
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Quality of Care, Safety, and Access
A Few States Fell Short in Timely Investigation of the Most Serious Nursing Home
Complaints: 2011–2015 (OEI-01-16-00330), September 2017
We found that nursing home complaints rose by one-third across States from 2011 to 2015.
During the period we reviewed, States conducted nearly all the required onsite
investigations for the two most serious levels of complaints. Although almost all States
conducted most of their onsite investigations within required timeframes, a few States fell
short. This data brief raises questions about how some States respond to complaints, as
these responses could have serious consequences for nursing home residents in those
States. To ensure the health and safety of nursing home residents, CMS must remain
vigilant and assist the States that are falling short in meeting timeframes for investigations
of complaints.
Early Alert: The Centers for Medicare & Medicaid Services Has Inadequate Procedures To
Ensure That Incidents of Potential Abuse or Neglect at Skilled Nursing Facilities Are
Identified and Reported in Accordance with Applicable Requirements (A-01-17-00504),
August 2017
This memorandum alerted CMS to the preliminary results of our ongoing review of
potential abuse or neglect of Medicare beneficiaries in SNFs. This audit is part of OIG’s
ongoing efforts to detect and combat elder abuse. We communicated these preliminary
results because of the importance of detecting and combating elder abuse.
We identified 134 Medicare beneficiaries whose injuries may have been the result of abuse
or neglect that occurred from January 1, 2015, through December 31, 2016. We also found
that a significant percentage of these incidents may not have been reported to law
enforcement. As a result, we determined that CMS has inadequate procedures to ensure
that incidents of potential abuse or neglect of Medicare beneficiaries residing in SNFs are
identified and reported. Accordingly, this Early Alert contained suggestions for immediate
actions that CMS could take to ensure better protection of vulnerable beneficiaries.
Opioids in Medicare Part D: Concerns about Extreme Use and Questionable Prescribing
(OEI-02-17-00250), July 2017
We found that one out of every three beneficiaries received a prescription opioid through
Medicare Part D in 2016. Half a million beneficiaries received high amounts of opioids
during the year; of these, almost 90,000 beneficiaries were at serious risk of opioid misuse
or overdose. These 90,000 beneficiaries either received extreme amounts of opioids or
appeared to be “doctor shopping.” Moreover, 401 prescribers had questionable
prescribing patterns for beneficiaries who are at serious risk. Ensuring the appropriate use
and prescribing of opioids is essential to protecting the health and safety of beneficiaries
and the integrity of Part D. OIG is committed to continuing investigations and evaluations
to address this issue. In addition, we call on Part D sponsors to work with OIG and CMS to
further improve efforts to combat opioid abuse and misuse in Medicare.
18
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2017 (OEI-0517-00160), June 2017
Overall, we found that the rate of Part D plan formularies’ inclusion of the drugs commonly
used by dual eligibles (i.e., individuals who are eligible for both Medicare and Medicaid) is
high, with some variation. Because some variation exists in formularies’ inclusion of these
drugs and in their application of utilization management tools to the drugs, some dual
eligibles may need to use alternative methods to access the drugs they take. This report
did not make recommendations.
Round 2 Competitive Bidding for CPAP/RAD: Disrupted Access Unlikely for Devices,
Inconclusive for Supplies (OEI-01-15-00040), June 2017
We found that Medicare payments for continuous positive airway pressure (CPAP) devices
and respiratory assist devices (RADs) continued after the July 2013 implementation of
Round 2 of the Competitive Bidding Program for almost all beneficiaries in both Round 2
bidding areas and non-bidding areas. Although payments for supplies declined more in
Round 2 bidding areas, the decline may not indicate disruptions in beneficiaries’ receiving
needed supplies. For example, the decline may indicate that the program reduced the
provision of unnecessary supplies, as CMS determined to be the case with Round 1 of the
program.
This report was the first in a series of three examining the effect of Round 2 Competitive
Bidding on Medicare beneficiary access to durable medical equipment. Subsequent
reports will examine beneficiary access to enteral nutrition supplies and oxygen equipment
and supplies.
Program Integrity
The Centers for Medicare & Medicaid Services Could Improve Performance Measures
Associated with the Fraud Prevention System (A-01-15-00509), September 2017
The Fraud Prevention System (FPS), which was developed to meet a requirement in the
Small Business Jobs Act of 2010, uses models that predict suspicious behavior to identify
and prevent the payment of improper Medicare claims. When performing work to certify
the actual and projected savings and the return on investment related to HHS’s use of the
FPS, we became aware that HHS might not have the capability to trace the savings from
administrative actions back to the specific FPS model that generated the savings. CMS
could not track those savings because, according to CMS, that capability was not built into
the FPS. In addition, CMS did not make use of all pertinent performance results because
CMS did not ensure that the contractors’ adjusted savings reported to CMS reflected the
amounts certified by OIG, and CMS did not evaluate FPS model performance on the basis
of the amounts actually expected to be prevented or recovered. As a result, the FPS is not
as effective as it could be in preventing fraud, waste, and abuse in Medicare.
19
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
CMS concurred with our recommendations that it make better use of its performance
results to refine and enhance the predictive-analytics technologies of the FPS models by
ensuring that the redesigned FPS is effective in allowing CMS to track savings from
administrative actions back to individual FPS models, ensuring that contractors adjust
savings reported to CMS to reflect only FPS-related savings amounts, and ensuring that
evaluations of FPS model performance consider not only the identified savings but also the
adjusted savings.
CMS Validated Hospital Inpatient Quality Reporting Program Data, But Should Use
Additional Tools to Identify Gaming (OEI-01-15-00320), April 2017
For payment year 2016, CMS met its regulatory requirement by validating sufficient hospital
inpatient quality reporting program data, which are used to adjust payments based on
quality. However, CMS made limited use of analytics, which can help identify gaming of
quality data. CMS concurred with our recommendation to make better use of analytics to
ensure the integrity of hospital-reported quality data and the resulting payment
adjustments.
Payment Policy and Trends
Medicare Payments for Clinical Diagnostic Laboratory Tests in 2016: Year 3 of Baseline
Data (OEI-09-17-00140), September 2017
Medicare paid $6.8 billion under Part B for clinical diagnostic laboratory tests (lab tests) in
2016, a total that changed very little in the 3-year period from 2014 through 2016. The top
25 tests by Medicare payments totaled $4.3 billion and represented 63 percent of all
Medicare payments for lab tests in 2016. More than half of payments for the top 25 tests
went to 1 percent of labs.
As part of legislation reforming Medicare’s payment rates for lab tests under Part B,
Congress mandated that OIG monitor Medicare payments for lab tests and publicly release
an annual analysis of the top 25 lab tests by Medicare payments. Changes in the Medicare
payment rates for these 25 tests could have a significant impact on overall Medicare
spending for lab tests when the new payment system for lab tests goes into effect in 2018.
Our data brief contained no recommendations.
Medicare Shared Savings Program: Accountable Care Organizations Have Shown
Potential for Reducing Spending and Improving Quality (OEI-02-15-00450), August 2017
The Medicare Shared Savings Program is one of the largest alternative payment models in
Medicare that reward providers for the quality and value of services. Over the first 3 years
of the program, most ACOs in the Medicare Shared Savings Program reduced Medicare
spending compared to their benchmarks, achieving a net spending reduction (i.e., total
reduced spending minus total increased spending) of nearly $1 billion. At the same time,
ACOs generally improved the quality of care they provided, according to an analysis of
20
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
CMS data on quality measures. Further, our analysis of CMS data for the first 3 years
revealed that a small subset of high-performing ACOs showed substantial reductions in
Medicare spending while providing high-quality care, as compared to other Shared Savings
Program ACOs and the national average for fee-for-service providers.
Medicare Market Shares of Mail-Order Diabetes Test Strips From October Through
December 2016 (OEI-04-16-00473), June 2017
We found that from October through December 2016, sampled suppliers provided 19 types
of diabetes test strips via the Medicare National Mail-Order program. The top 2 strip types
accounted for 53 percent of the Medicare mail-order market, and the top 10 strip types
accounted for 97.5 percent.
This was the third of three OIG reports addressing the Medicare market shares of diabetes
test strips in 2016. This report provides additional information on the market shares of
types of diabetes test strips provided by Medicare from October through December 2016.
CMS will use the results from the second OIG report (OEI-04-16-00471, February 2017) to
determine bidders’ adherence with the “MIPPA 50-percent rule” for the next round of
competitive bidding. (The Medicare Improvements for Patients and Providers Act (MIPPA)
prohibits CMS from awarding a contract to a supplier of diabetes test strips if the supplier’s
bid does not cover at least 50 percent, by volume, of all types of diabetes test strips on the
market.) Contracts for the current round of the National Mail-Order program began on
July 1, 2016, and expire on December 31, 2018.
Medicare Could Save Millions by Eliminating the Lump Sum Purchase Option for All
Power Mobility Devices (A-05-15-00020), May 2017
Medicare Part B covers power mobility devices, which include power-operated vehicles and
standard and complex power wheelchairs. Effective January 1, 2011, the Affordable Care Act
(ACA) eliminated the lump-sum purchase option for standard rehabilitative power
wheelchairs, requiring suppliers to provide these devices on a monthly rental basis. From
2011 through 2014, Medicare saved up to an estimated $86 million by eliminating the lumpsum purchase option for standard power wheelchairs. However, the lump-sum purchase
option remained available for nonstandard power mobility devices—i.e., power-operated
vehicles and complex power wheelchairs.
Medicare could save millions by eliminating the lump-sum purchase option for all power
mobility devices and requiring that all power mobility devices be provided to beneficiaries
on a monthly rental basis. Medicare could have saved an additional $10,245,539 from
calendar years 2011 through 2014 if it had eliminated the lump-sum payment option for all
power mobility devices.
CMS stated it would consider our recommendation that it seek legislation to eliminate the
lump-sum payment option for all power mobility devices.
21
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Drug Pricing and Reimbursement
CMS and Its Claims Processing Contractors Issued Conflicting Guidance on the Proper
Use of the KX Modifier for Part B Immunosuppressive Drug Claims (A-06-15-00018),
August 2017
Medicare Part B covers immunosuppressive drugs for beneficiaries who receive an organ
transplant for which Medicare payment has been made. A record of fee-for-service
transplant claims should be retained in the beneficiary’s claims history. When Medicare
cannot locate a fee-for-service claim in a beneficiary’s history, a pharmacy can submit a
claim for an immunosuppressive drug with a KX modifier to indicate that it has records
showing that the beneficiary is eligible for Medicare coverage. In FY 2014, Part B paid
almost $353 million for immunosuppressive drugs and nearly 100 percent of the claims
were submitted with the KX modifier. CMS intended the KX modifier to signify that the
pharmacy had documentation proving that a beneficiary’s organ transplant occurred when
the beneficiary was eligible for Medicare coverage. However, CMS guidance is not clearly
written and the guidance issued by claims processing contractors conflicted with CMS
guidelines by indicating that claims without the KX modifier would be denied.
Part B paid for some immunosuppressive drugs billed with the KX modifier that were not
eligible for Part B payment. Of the 75 claims in our random sample, pharmacies did not
have documentation to support the KX modifier for 10 claims. On the basis of our sample
results, we estimated that Part B paid $4.6 million in reimbursement for immunosuppressive
drugs billed with the KX modifier that did not comply with Medicare requirements.
CMS concurred with our recommendation that it clarify language in its guidance and
instruct the claims processing contractors to process immunosuppressive drug claims
without the KX modifier and educate pharmacies on the correct use of the modifier.
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 2015 Average
Sales Prices (OEI-03-17-00360), September 2017
OIG is required to compare the average sales price (ASP) with the average
manufacturer price (AMP) of drugs reimbursed under Medicare Part B. If OIG finds
that the ASP for a drug exceeds the AMP by a certain percentage, CMS can substitute
the ASP-based amount with the lower rate. In response to data provided by OIG, CMS
lowered Part B reimbursement for 13 drugs, saving Medicare and its beneficiaries
$5.4 million over 1 year based on 2015 data. This finding highlights the success of
OIG’s mandated quarterly comparisons of average sales prices with AMPs and
implementation of CMS’s current price-substitution policy. OIG continues to
recommend that CMS expand the price-substitution criteria. CMS did not concur with
this recommendation to expand the price-substitution policy and believes that more
experience with this policy is needed before it can be expanded.
Calculation of Potential Inflation Indexed Rebates for Medicare Part B Drugs (OEI-12-1700180), August 2017
22
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
In response to a congressional request, OIG found that if Medicare Part B were to
implement a prescription drug rebate program similar to Medicaid’s, it could have resulted
in at least $1.4 billion in rebates in 2015 for Part B drugs when prices increased faster than
inflation. Any consideration of a rebate program should address several administrative
issues that may hinder rebate collections. This report had no recommendations.
Medicare Part B Drug Payments: Impact of Price Substitutions Based on 201 4 Average
Sales Prices (OEI-03-16-00540), August 2017
OIG is required to compare the ASP with the AMP of drugs reimbursed under Medicare
Part B. If OIG finds that the ASP for a drug exceeds the AMP by a certain percentage, CMS
can substitute the ASP-based amount with a lower rate. In response to data provided by
OIG, CMS lowered Part B reimbursement for 14 drugs, saving Medicare and its beneficiaries
$24 million over 1 year based on 2014 data. This finding highlights the success of OIG’s
mandated quarterly comparisons of ASPs with AMPs and implementation of CMS’s current
price-substitution policy. OIG continues to recommend that CMS expand the pricesubstitution criteria. CMS did not concur with this recommendation to expand the pricesubstitution policy and believes that more experience with this policy is needed before it
can be expanded.
23
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Medicaid Program Reports and Reviews
Financial Management and Improper Payments
Arkansas Did Not Make Supplemental Payments in Accordance with Federal
Requirements (A-06-15-00042), September 2017
To encourage primary care providers to participate in Medicaid, the ACA required States to
pay increased Medicaid payments (supplemental payments) to eligible providers in
calendar years 2013 and 2014. The States received a Federal matching rate of 100 percent
for any supplemental payment.
Arkansas did not always make the supplemental Medicaid payments in accordance with
Federal requirements. Of the 120 supplemental payments in our stratified random sample,
88 were incorrectly calculated, made to ineligible providers, or both. We estimated that
Arkansas improperly received at least $7.1 million in additional Federal share, of which we
recommended recovery of approximately $3 million.
Arkansas concurred with our findings, which were the basis of our recommendation that it
refund approximately $3 million to the Federal Government for the Federal share
associated with the inappropriate supplemental payments.
Texas Improperly Received Medicaid Reimbursement for School Based Health Service (A06-14-00002), August 2017
To ascertain the portion of time and activities of a school-based health program that is
related to the provision of Medicaid services, States may develop an allocation
methodology that is approved by CMS. Random moment sampling, which makes use of
random moment time studies, is an approved allocation methodology and must reflect all
of the time used and activities performed by employees participating in a school-based
health program. Not all of the direct medical service costs that the State agency claimed
for Medicaid School Health and Related Services (SHARS) were reasonable, adequately
supported, and otherwise allowable in accordance with applicable Federal and State
requirements. Of the 3,161 random moments we reviewed, 274 were coded incorrectly. As
a result of these errors, Texas received $18.9 million in unallowable Federal reimbursement
for the Medicaid SHARS program from October 2010 through September 2011.
Additionally, Texas’s random moment sampling did not include all eligible sample moments
in the random moment time studies. Also, we were unable to reproduce the sampling
process or verify that Texas and the contractor did not make any unallowable changes to
the sample. Thus, we are unable to verify whether the sample was valid.
Texas neither agreed nor disagreed with our recommendations that it refund the $18.9
million Federal share of unallowable reimbursement that was claimed for the Medicaid
SHARS program.
New York State Improperly Claimed Medicaid Reimbursement for Some Managed Long
Term Care Payments (A-02-15-01026), August 2017
24
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Medicaid Managed Long-Term Care (MLTC) plans under contract with New York receive
fixed monthly payments to provide services to Medicaid beneficiaries who are chronically ill
or disabled and who wish to stay in their homes and communities. In return, the plans
agree to the terms of New York’s MLTC contract, which was approved by CMS.
New York improperly claimed reimbursement for 36 of 100 payments made to MLTC plans
that we reviewed. New York did not ensure that MLTC plans documented eligibility
assessments of program applicants and reassessments of those already in the program or
conducted these assessments in a timely manner. New York also did not ensure that the
plans provided services to beneficiaries according to a written care plan or that the plans
enrolled and retained only those beneficiaries who required community-based services and
disenrolled beneficiaries in a timely manner. In addition, for 71 beneficiaries associated with
the payments we reviewed, the beneficiaries’ MLTC plans did not comply with New York’s
contract requirements for service planning and care management. As a result, there could
have been health and safety risks to these beneficiaries.
New York did not concur or nonconcur with our recommendations that it (1) develop
procedures to monitor MLTC plans for compliance with requirements in its contract and (2)
ensure that future contracts include provisions that allow it to recover payments when
plans do not comply with contract requirements. This measure could have saved Medicaid
$1.4 billion ($717 million Federal share) during our 1-year audit period.
New Jersey Claimed Medicaid Reimbursement for Adult Partial Hospitalization Services
That Did Not Comply with Federal and State Requirements (A-02-14-01015), April 2017
We identified a significant number of services provided by New Jersey on an outpatient
basis to adults with mental illnesses, known as partial hospitalization services, that were
improperly submitted for Federal Medicaid reimbursement.
New Jersey claimed at least $30.7 million in Federal Medicaid reimbursement over 4 years
for adult partial hospitalization services that were unallowable. Of the 100 New Jersey
claims for reimbursement for these services that we sampled, all 100 did not comply with
Federal and State requirements, and 92 contained more than 1 deficiency. We estimated
that New Jersey improperly claimed at least $30.7 million in Medicaid reimbursement for
these services.
New Jersey did not concur or nonconcur with our recommendations that it ensure that
partial hospitalization services are provided by appropriately licensed hospitals, issue
guidance to providers on requirements for claiming Medicaid reimbursement for partial
hospitalization services, improve its monitoring of partial hospitalization services providers,
review and revise payment controls to ensure the correct rates are paid for partial
hospitalization services, and work with CMS to identify claims outside of our audit period
that were paid at an incorrect rate or for services that were not provided by an appropriate
facility.
CMS did not concur with our recommendation that it refund $30.7 million.
25
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Ohio’s and Michigan’s Sales and Use Taxes of Medicaid Managed Care Organization
Services Do Not Meet Broad Based Requirement (A-03-16-00200), April 2017
In 2016, Ohio and Michigan did not meet Federal requirements that taxes on Medicaid
managed care organizations (MCOs) be broad-based. Specifically, they continued to tax
only Medicaid MCOs under their sales and use tax programs. Ohio stated that it would
work with CMS to address changes that might need to be made to its tax.
Our review covered eight States (California, Georgia, Kentucky, Michigan, Missouri, Ohio,
Oregon, and Pennsylvania) that the National Conference of State Legislatures identified as
continuing to tax only Medicaid MCOs as of June 2009. Two States—California and
Pennsylvania—implemented new MCO tax programs effective July 1, 2016, to conform to
the Deficit Reduction Act. Four States (Georgia, Kentucky, Missouri, and Oregon)
discontinued collecting their Medicaid MCO-only tax on September 30, 2009, to conform
to the Deficit Reduction Act. CMS granted Ohio a waiver that would bring Ohio’s proposed
MCO tax into compliance and became effective on July 1, 2017. Michigan discontinued its
tax on December 31, 2016, as scheduled, and is now also in compliance.
CMS concurred with our recommendation that it monitor Ohio’s and Michigan’s use of
revenues from their sales and use tax on Medicaid MCOs as part of the State share of
Medicaid program expenditures after December 31, 2016, and verify that they conform to
Federal requirements that such taxes be broad-based.
California Incorrectly Claimed Additional Medicaid Funding Authorized Under the Recovery
Act When Reclaiming Overpayments Made to Bankrupt or Out of Business Providers (A-0914-02030), April 2017
States are required to refund to the Federal Government the Federal share of a Medicaid
overpayment at the end of the 1-year period following the date the overpayment is
identified. If a State determines that the overpayment is uncollectable because the
provider is bankrupt or out of business, the State is allowed to reclaim the Federal share of
the overpayment.
For FYs 2010 through 2013, California claimed $58.3 million in Federal reimbursement for
Medicaid uncollectable overpayments. We reviewed California because the Federal
reimbursement it claimed for uncollectible overpayments during this period represented
approximately 70 percent of the total nation-wide.
California incorrectly used Federal medical assistance percentages (FMAPs) increased by
the American Recovery and Reinvestment Act (Recovery Act) to claim additional Federal
reimbursement of almost $6.6 million for 250 uncollectible overpayments that were not
originally made during the recession adjustment period or were not previously refunded to
the Federal Government using the increased FMAPs.
California agreed with our recommendations that it refund almost $6.6 million to the
Federal Government and ensure that it uses the FMAPs in effect when the original
26
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
overpayments were made and refunded when claiming Federal reimbursement for
uncollectible overpayments.
Medical Loss Ratio
Private health insurers, Medicare Advantage plans, and Medicare Part D sponsors are
required to spend a fixed percentage of premium dollars to provide medical services and
health quality improvement activities. This percentage is known as a medical loss ratio
(MLR).
Review of Wisconsin Medicaid Managed Care Program Potential Savings With Minimum
Medical Loss Ratio (A-05-15-00040), June 2017, and
Review of Pennsylvania Medicaid Managed Care Program Potential Savings With
Minimum Medical Loss Ratio (A-03-15-00203), July 2017
These two reports are part of a series of reviews that OIG conducted to determine whether
Medicaid could achieve savings if States required Medicaid MCOs to meet a minimum MLR
standard and pay remittances if the MLR standard were not met.
In 2014, Wisconsin could have saved $16.2 million ($9.6 million Federal share) and
Pennsylvania could have saved between $8 million ($4.3 million Federal share) on a
contract and grant basis and $81.4 million ($42.3 million Federal share) on a rating category
basis if the two States (1) required their Medicaid managed care plans to meet the
minimum MLR standard similar to the Federal standards for other plans and (2) required
remittances when Medicaid managed care plans did not meet the MLR standard.
Of the 11 managed care plans we reviewed in Wisconsin, 4 plans had MLRs that were less
than 85 percent (the minimum MLR standard for large private insurers) during 2014. Of the
27 contracts and grants that we reviewed in Pennsylvania, 6 had MLRs that were less than
85 percent during 2014. After our reviews but before the issuance of our reports, CMS
published a final rule requiring Medicaid MCOs to achieve a minimum MLR for rate-setting
purposes.
Wisconsin and Pennsylvania agreed with our recommendations that they incorporate into
their contracts with Medicaid MCOs the MLR standards adopted in the CMS final rule and
consider implementing into their Medicaid MCO contracts a remittance requirement if
appropriate.
Quality of Care, Safety, and Access
Maine Did Not Comply with Federal and State Requirements for Critical Incidents
Involving Medicaid Beneficiaries with Developmental Disabilities (A-01-16-00001), August
2017
Maine did not comply with Federal Medicaid waiver requirements and State requirements
for reporting and monitoring critical incidents involving Medicaid beneficiaries with
developmental disabilities. Maine did not ensure that community-based providers
27
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
reported all critical incidents to Maine; did not ensure that community-based providers
conducted administrative reviews of all critical incidents involving serious injuries,
dangerous situations, or suicidal acts and submitted their findings within 30 days; did not
appropriately report all restraint usage and rights violations; did not review and analyze
data on all critical incidents; did not investigate and report immediately to the appropriate
office all critical incidents involving suspected abuse, neglect, or exploitation; and did not
ensure that all beneficiary deaths were appropriately reported, analyzed, investigated, and
reported to the appropriate office.
Maine failed to demonstrate that it has a system to ensure the health, welfare, and safety of
the 2,640 Medicaid beneficiaries with developmental disabilities covered by the Medicaid
waiver program.
Maine agreed or partially agreed with all our recommendations that it fully implement its
regulations regarding the reporting and monitoring of critical incidents to fulfill the
participant safeguard assurances it provided in its Medicaid waiver and help protect
Medicaid beneficiaries from harm.
Program Integrity
Challenges Appear To Limit States’ Use of Medicaid Payment Suspensions (OEI-09-1400020), September 2017
When State Medicaid agencies determine an allegation of fraud against a provider is
credible, they are required to suspend payments for health care items and services, unless
good cause exists not to suspend payments. Most State Medicaid agencies (41 of 56)
reported imposing 10 or fewer payment suspensions in FY 2014. Medicaid agencies
reported significant challenges related to imposing payment suspensions, which appear to
have limited States’ use of this program integrity tool. CMS concurred with our
recommendation to provide additional technical assistance to help Medicaid agencies fully
utilize Medicaid payment suspensions as a program integrity tool.
T-MSIS Data Not Yet Available for Overseeing Medicaid (OEI-05-15-00050), June 2017
OIG’s most recent review of the Transformed Medicaid Statistical Information System (TMSIS) continues to identify concerns with T-MSIS data. Medicaid data are vital for the
effective administration and oversight of the Medicaid program by States and the Federal
Government, but problems with Medicaid data have hindered program integrity, research,
budgeting, and policy.
After failing to meet the implementation deadline of January 2014, CMS and States
reported that technological problems and competing priorities caused further delays with
T-MSIS. Most recently, CMS indicated that it expects that all States will be reporting to
T-MSIS by the end of 2017. As of December 2016, 21 States were submitting data.
28
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
As States and CMS work together to enter data into T-MSIS, they continue to raise
concerns about the completeness and reliability of the data. Because of CMS’s history of
delaying target dates for implementation, OIG is concerned that CMS and States will delay
further rather than address these outstanding challenges. OIG continues to support our
2013 recommendation that CMS establish a deadline for when T-MSIS data will be available
for program analysis and other management functions. Without a fixed deadline, some
States and CMS may not make T-MSIS a management priority.
Florida Did Not Suspend Medicaid Payments for Some Cases With Credible Fraud
Allegations in Accordance with the Affordable Care Act (A-04-14-07046), April 2017
Florida did not always suspend Medicaid payments to providers that had credible fraud
allegation cases in accordance with legal requirements. Of the 95 cases that we reviewed,
Florida did not suspend Medicaid payments for 54 cases. For four cases, investigations into
credible allegations of fraud were ongoing, but Florida did not suspend Medicaid
payments. As such, the Federal share ($8 million) of these payments was not eligible for
Federal reimbursement. For one case with a completed investigation that resulted in a civil
settlement, Florida did not provide documentation to support that it returned the Federal
share of $236,544 to the Federal Government. For 49 cases for which investigations were
complete, Florida had not suspended Medicaid payments totaling $40 million (Federal
share) when the fraud investigations were pending.
Florida did not concur with our recommendations that it refund $8 million to the Federal
Government and update its policies and procedures to ensure that it suspends Medicaid
payments to providers with credible allegations of fraud, which could have prevented $40
million (Federal share) from being at risk.
Florida partially concurred with our recommendation that it refund $236,544 to the Federal
Government related to one case for which Florida did not provide documentation to
support that it returned the Federal share to the Federal Government.
Payment Policy and Trends
Medicaid Eligibility Determinations
The ACA gave States the option to expand Medicaid coverage to low-income adults
without dependent children and established a higher Federal reimbursement rate (FMAP)
for services provided to these newly eligible beneficiaries. We examined whether Kentucky
was determining Medicaid eligibility for all its beneficiaries in accordance with Federal and
State requirements.
Kentucky Did Not Correctly Determine Medicaid Eligibility for Some Newly Enrolled
Beneficiaries (A-04-15-08044), May 2017, and
Kentucky Did Not Always Perform Medicaid Eligibility Determinations for Non-Newly
Eligible Beneficiaries in Accordance with State and Federal Requirements (A-04-1608047), August 2017
Of our sample of 120 newly enrolled beneficiaries, Kentucky did not determine the eligibility
for 9 in accordance with Federal and State requirements. For our sample of 120 non-newly
29
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
enrolled beneficiaries, Kentucky did not determine the eligibility in accordance with
requirements for 7. Kentucky did not always electronically or manually verify income and
citizenship or keep documentation of that verification. And although it did not violate an
eligibility requirement, Kentucky did not perform, or maintain documentation of, identityproofing for 40 newly enrolled beneficiaries or 13 non-newly enrolled beneficiaries in
accordance with Federal requirements. The Federal identity-proofing requirements are
intended to reduce the potential for identity theft.
Kentucky made Federal Medicaid payments on behalf of 34,593 potentially ineligible newly
enrolled beneficiaries totaling $105 million. Kentucky made Federal Medicaid payments on
behalf of 69,931 potentially ineligible non-newly enrolled beneficiaries totaling $72.8
million. We did not include the identity-proofing errors in our estimate of potentially
ineligible beneficiaries and payments, but we are highlighting the potential for identity theft
if Kentucky does not correct these errors.
Kentucky agreed with our recommendation in both reports that it redetermine, if necessary,
the current Medicaid eligibility status of the sample beneficiaries for whom income or
citizenship verifications did not meet Federal and State requirements. For the newly
enrolled beneficiaries, Kentucky also agreed with our recommendations that it ensure that
the enrollment system used to determine eligibility verifies income and citizenship data
using available electronic data sources and ensure that the enrollment system used verifies
applicants’ identity and maintains identity-proofing documentation.
Drug Pricing and Reimbursement
Previous OIG reviews found that States did not always bill and collect all rebates due for
drugs administered by physicians to enrollees of Medicaid MCOs. For pharmacy and
physician-administered drugs, Washington did not bill for and collect from manufacturers
rebates of $34.1 million ($17 million Federal share), and Hawaii did not bill for and collect
from manufacturers rebates of $18.8 million ($9.7 million Federal share).
Washington State Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to
Enrollees of Medicaid Managed-Care Organizations (A-09-16-02028), September 2017
Hawaii Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to Enrollees of
Medicaid Managed-Care Organizations (A-09-16-02029), September 2017
Washington and Hawaii concurred or partially concurred with our recommendations that
they bill for and collect from manufacturers rebates for pharmacy drugs and refund $34.1
million (Washington) and $18.8 million (Hawaii); work with CMS to determine the amount of
any rebates due for the 17,140 claim lines that we set aside (Washington) or whether the
other physician-administered drugs were eligible for rebates and, if so, determine the
rebates due (Hawaii); and improve oversight of the processes for determining drug rebate
eligibility (Washington) and rebate billing and collection (Hawaii) to ensure that MCOs
submit valid and complete drug utilization data for pharmacy and physician-administered
drugs dispensed to MCO enrollees.
30
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Legal and Investigative Activities Related to the
Medicare and Medicaid Programs
OIG investigates allegations of fraud, waste, and abuse in all HHS programs. Our largest
body of work involves investigating matters related to the Medicare and Medicaid
programs, such as patient harm; billing for services not rendered, medically unnecessary
services, or upcoded services (i.e., services billed for at a level higher than warranted); illegal
billing, sale, and diversion of prescription drugs; the marketing of off-label uses for
prescription drugs; and solicitation and receipt of kickbacks, including illegal payments to
patients for involvement in fraud schemes and illegal referral arrangements between
physicians and medical companies.
Specific case types include fraud schemes related to:
•
•
•
•
•
controlled and noncontrolled prescription drugs,
home health agencies and personal care services,
ambulance transportation,
durable medical equipment, and
diagnostic radiology and laboratory testing.
OIG also conducts investigations regarding organized criminal activity, including medical
identity theft and fraudulent medical schemes established for the sole purpose of stealing
Medicare dollars. Investigators are opening an increasing number of cases against health
care providers and patients who engage in these health care fraud schemes. Those who
participate in the schemes may face heavy fines, jail time, and exclusion from participation
in Federal health care programs.
In addition to investigating Medicare and Medicaid fraud, OIG investigates fraud, waste,
and abuse in other HHS programs, including ACF, IHS, the Health Resources and Services
Administration (HRSA), and ACL. OIG investigates potential misuse of grants and contract
funds awarded by CDC, NIH, the Substance Abuse and Mental Health Services
Administration (SAMHSA), and other HHS agencies. Under certain circumstances, OIG
investigates noncustodial parents who fail to pay court-ordered child support. OIG also
investigates allegations of employee misconduct, whistleblower reprisals, and wrongdoing
by HHS agency officials.
One of the most common types of fraud perpetrated against Medicare, Medicaid, and
other Federal health care programs involves filing false claims for reimbursement. False
claims may be pursued under Federal and State criminal statutes and, when appropriate,
under the FCA. Depending on the types of fraud or other violations involved, OIG
investigations may culminate in criminal or civil court judgments and decisions,
administrative sanctions and decisions, and/or negotiated settlement agreements.
Investigative outcomes take many forms, including incarceration, restitution, fines,
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Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
penalties, forfeitures, assessments, and exclusion of individuals or entities from participation
in all Federal health care programs. Frequently used exclusion and penalty authorities are
described on our website at http://oig.hhs.gov/fraud/enforcement/cmp/.
During this semiannual reporting period, we reported 373 criminal and 360 civil actions
against individuals or entities that engaged in offenses related to health care. We also
reported over $1.62 billion in investigative receivables due to HHS and more than $422.4
million in non-HHS investigative receivables, including civil and administrative settlements
or civil judgments related to Medicare, Medicaid, and other Federal, State, and private
health care programs.
The following are recently completed actions and settlements organized by subject area.
Prescription Drugs
New York―Leopoldo Tejada and his codefendants conducted a scheme to defraud
Medicaid, Medicare, and the New York State-funded AIDS Drug Assistance Program
(ADAP) through the purchase and sale of illegally diverted prescription drugs. Specifically,
from 2006 through August 2013 the defendants purchased prescription drugs, including
high-cost medications used to treat HIV, that were obtained from patients who sold the
drugs rather than use them to treat their illnesses. The drugs were then repackaged and
resold to their customers, as if they were new drugs obtained from legitimate sources. The
defendants requested and received reimbursement from Medicaid, Medicare, and ADAP in
connection with these sales, even though these programs would not have been willing to
reimburse the cost of secondhand drugs.
Tejada pleaded guilty to conspiracy to commit wire and health care fraud and was ordered
to pay $7.5 million in restitution, joint and several. Two defendants involved in the scheme
were previously sentenced to a combined 3 years and 1 month in prison and ordered to
pay $7.5 million restitution, joint and several. To date, four codefendants have been
excluded from participation in Federal health care programs for a combined 102 years.
Michigan―Three co-conspirators connected with the health care provider Compassionate
Doctors, PC, were convicted of charges resulting from their involvement in an unlawful
prescription drug operation. In all, they were sentenced to a combined 46 years and 4
months in prison, and ordered to pay $10.7 million in restitution.
The defendants—Compassionate Doctors, PC, owner Sardar Ashrafkhan; Dr. Adelfo
Pamatmat; and pharmacist Nadeem Iqbal—conspired to operate a fraudulent medical
practice and pharmacy. Compassionate Doctors, PC, purported to be a visiting physician’s
practice; however, the actual scheme involved patient marketers bringing paid “patients” to
residences to obtain fraudulent prescriptions for controlled substances. Medicare was
billed for medical examinations and tests that were not conducted properly or were never
conducted at all. At the cooperating pharmacy, patient marketers filled prescriptions for
controlled substances to be sold on the street for profit.
32
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
Twenty-eight defendants involved in the scheme were previously sentenced to a combined
134 years and 11 months in prison and held responsible, both joint and several, for part of
the $10.7 million in restitution. To date, 27 codefendants in this matter have accounted for
a cumulative 371 years towards exclusion from Federal health care programs.
Pharmaceutical Companies
Massachusetts―Mylan Inc. and Mylan Specialty L.P. (collectively, Mylan) agreed to pay
$465 million to resolve FCA liability associated with the drug EpiPen. Specifically, Mylan
resolved allegations that from July 29, 2010, through March 31, 2017, it improperly classified
EpiPen as a generic drug rather than a brand-name drug for purposes of the Medicaid
drug rebate program. As a result, Mylan allegedly underpaid rebates to Medicaid for
EpiPen and overcharged covered entities that purchased EpiPen under the 340B Drug
Discount Program, which requires drug manufacturers to charge covered entities prices
that are at or below ceiling prices. Concurrent with the FCA settlement, Mylan entered into
a 5-year CIA, which requires an independent review organization to annually review
multiple aspects of Mylan’s practices relating to the Medicaid drug rebate program.
Physicians
Pennsylvania―Dr. Jeffrey Bado was a physician who owned a medical practice. Evidence at
trial showed that Bado had prescribed large amounts of oxycodone and methadone to
patients outside the usual course of professional practice and without medical necessity.
By the time Bado’s practice closed in 2013, he was charging new patients $800 cash per
visit, charging returning patients $400 cash, and refusing to accept medical insurance.
Bado’s patients received at most a cursory physical examination and little other medical
care or treatment. Even when Bado knew patients were addicted to oxycodone, were using
illegal drugs, or were not taking the oxycodone prescribed, he continued to provide
prescriptions for large amounts of oxycodone. Multiple former patients testified to
becoming addicted to oxycodone prescribed by him. There was no evidence at trial
suggesting that Bado had referred patients to opioid addiction treatment. Bado was
convicted of 307 felony counts, including maintaining a drug-involved premises, drug
distribution resulting in a death, drug distribution, health care fraud, and making false
statements to Federal agents. He was sentenced to 25 years in prison.
Home Health
Texas―Dr. Jacques Roy was engaged in a large-scale, sophisticated home health care
scheme to defraud Medicare and Medicaid. According to evidence presented at trial, from
November 2004 through February 2012, Roy and his codefendants were involved in a
scheme to recruit patients to receive unnecessary home visits and home health services. In
some instances, the home health agencies paid recruiters kickbacks to find Medicare
beneficiaries at a homeless shelter. The home health agency owners falsified documents to
make it appear as though the beneficiaries qualified for home health care services, and Roy
directed his staff to certify the beneficiaries for home health services, regardless of medical
need. After an individual was certified for home health care services, the home health
33
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
nurses then falsified visit notes to make it appear as though skilled nursing services were
being provided and continued to be necessary, and the home health agencies and Roy
submitted fraudulent claims to Medicare.
Roy and his co-defendants were convicted of conspiracy to commit health care fraud,
health care fraud, making a false statement relating to health care matters, and obstruction
of justice. Roy was sentenced to 35 years in prison and ordered to pay $268.1 million in
restitution, joint and several with his codefendants. Five additional defendants involved in
the scheme were previously sentenced to a combined 41 years and 6 months and ordered
to pay joint and several portions of the $268.1 million restitution.
Ohio―Delores Knight, owner of the home health agency Just Like Familee (JLF), and three
of her employees were involved in a scheme to submit false claims to Medicare, Medicaid,
and other Federal health programs. Together, the four individuals engaged in a conspiracy
to prepare and submit forged or false records in support of previously submitted and
reimbursed billings for patients they did not actually provide face-to-face services. Delores
Knight and her son, Isaac Knight, the administrator of one of the JLF offices, were found
guilty of conspiracy to commit health care fraud and health care fraud. Delores Knight was
also convicted of money laundering. The defendants were ordered to serve a combined 17
years and 3 months in prison, and ordered to pay $8.1 million in restitution, joint and
several. Director of nursing Sonja Ferrell and biller Juliet Bonner pleaded guilty to health
care fraud and were sentenced to serve a combined 1 year and 6 months in prison, and
were ordered to pay $1.4 million in restitution, joint and several.
Transportation
Pennsylvania―Yuriy Nesterov, owner of Triumph Ambulance, Inc., engaged in a scheme to
defraud Medicare. Specifically, Triumph Ambulance employees, at the direction of
Nesterov, transported Medicare beneficiaries by ambulance or in personally owned vehicles
to regularly scheduled dialysis treatments. These patients were not medically eligible for
ambulance transportation reimbursed by Medicare. Nesterov submitted false claims to
Medicare for reimbursement and also provided kickbacks to Medicare beneficiaries.
Nesterov pleaded guilty to 12 counts of health care fraud and was sentenced to 3 years’
confinement and ordered to pay $690,390 in restitution.
Durable Medical Equipment
New Jersey―Multiple businesses entered into two separate settlement agreements to
resolve allegations that the defendants knowingly caused false claims to be submitted in
connection with cardiac monitoring services. The first settlement agreement was with AMI
Monitoring, Inc.; Spectocor, LLC; and Joseph Bogdan, and the second agreement was with
Medi-Lynx Cardiac Monitoring, LLC (Medi-Lynx), and Medicalgorithmics S.A.
The defendants allegedly marketed cardiac monitoring services and designed a Web-based
registration system that led to the submission of, or caused the submission of, false claims
for cardiac monitoring services. Specifically, AMI Monitoring, Inc. and Medi-Lynx marketed
34
Department of Health and Human Services Office of Inspector General
Semiannual Report to Congress—April 1, 2017, through September 30, 2017
a cardiac monitoring device called the PocketECG. This device, created by
Medicalgorithmics, S.A., is unique in that it is capable of performing as a short-term Holter
monitor, a medium-term event monitor, or a longer term telemetry monitor. Although the
PocketECG was capable of performing all three cardiac monitoring functions, the
defendants allegedly designed the Web-based device registration system in such a way as
to steer physicians to select telemetry—which provided the highest rate of
reimbursement—for all Medicare patients, even when they wanted to select one of the less
expensive services.
The defendants agreed to pay a total of $13.4 million to resolve their FCA liability, and
Medi-Lynx also agreed to a 5-year CIA.
Georgia―Barbara Wallace was the manager of MBA Diabetic Footwear Solutions, a
Medicaid provider. The investigation disclosed that Wallace caused fraudulent claims to be
submitted to Medicaid for medical equipment that was not medically necessary, not
prescribed by a physician, and, on many occasions, never provided to a patient. Wallace
then used the money defrauded from Medicaid for her own personal benefit. Wallace
pleaded guilty to one count of health care fraud and was sentenced to 3 years and 5
months in prison and ordered to pay $948,361 in restitution and forfeiture.
Laboratories
South Carolina―Berkeley Heartlab, Inc. (Berkeley) and its indirect owner, Quest Diagnostics,
Inc. (Quest), entered into a settlement agreement to resolve that Berkeley knowingly
submitted or caused to be submitted false or fraudulent claims to Medicare and TRICARE.
From 1999 through January 2012, the defendant allegedly offered and/or paid illegal
remuneration to health care providers through ‘process and handling’ payments related to
the collection of blood to induce referrals in violation of the anti-kickback statute. To
induce referrals to Berkeley for testing, Berkeley allegedly offered to waive and/or waived
cost-sharing obligations (such as copayments and deductibles) for certain TRICARE
beneficiaries, in violation of the anti-kickback statute. The defendant also allegedly
submitted or caused to be submitted claims for payment to Medicare and TRICARE for
tests that …

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