OIG Raps MACs in Report to Congress

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Original story posted on: June 4, 2014

In its latest (Spring 2014) Semiannual Report to Congress of the Health and Human Services Office of the Inspector General (HHS OIG), Daniel R. Levinson, HHS Inspector General began by outlining his office’s major areas of focus in the preceding months.

OIG efforts included “ramped up” oversight of implementation of the Affordable Care Act, including the Health Insurance Marketplaces, monitoring items “such as eligibility systems, payment accuracy, contractor oversight, and data security” with particular emphasis on surveillance for fraud. Levinson gave an example of the OIG’s work to ensure “the appropriate use of prescription drugs by Medicare and Medicaid beneficiaries” by detecting “drug overutilization, fraud, and abuse that resulted in criminal or civil prosecutions. He specifically mentioned conviction of a radiological technician who stole opiates meant for cardiac patients and infected them with Hepatitis C in the process. Levinson touted the OIG’s oversight of state administration of the Child Health Insurance Program (CHIP) block grants and, of particular interest to hospitals, he cited his office’s efforts to “identify vulnerabilities in, and recommendations for improving, the Centers for Medicare & Medicaid Services’ (CMS) oversight of the contractors…Reports generated during this reporting cycle identified Medicare Administrative Contractor performance shortcomings and highlighted issues that limit CMS’s ability to effectively oversee Part C and Part D contractors.”

The report featured the OIG’s criminal and civil enforcement actions through the Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is active in nine cities – those with the highest incidence of Medicare and Medicaid fraud. For the report period, “expected recoveries” totaled $3.1 billion with $295 million from audits and $2.83 billion from investigations. Another $813.7 million in recoveries came from activities such as Medicaid restitution initiated by the states. There were 465 criminal actions and 266 civil actions with 1,720 individuals and entities added to the 57,000 already on the Excluded Providers List. In one example cited, a fraud scheme in New York billed Medicare over $71 million in false claims for which Medicare reimbursed $47 million. The co-conspirators paid kickbacks to Medicare beneficiaries in return for receiving unnecessary physicians’ services, physical therapy, and tests.  The ring leader was sentenced to 15 years in prison and required to pay $50.9 million in restitution. Other coconspirators were imprisoned and fined large sums.

The HEAT program also attacked prescription medication abuse including “pharmaceutical manufacturer noncompliance, retail pharmacy and prescriber schemes, and flawed reimbursement methodologies.” In “one of the largest health care fraud settlements in U.S. history,” Johnson and Johnson agreed to pay $2.2 billion and enter into a corporate integrity agreement after being charged with promoting the use of anti-psychotic medications Risperdal and others for off-label use in patients with agitated dementia. The scheme allegedly included “paying kickbacks to physicians and to the nation’s largest long-term care pharmacy provider, Omnicare, Inc.” HEAT actions included attacks on “illegal prescriptions, pseudo-patients, and multiple drug trafficking organizations,” including sentencing of 51 defendants in Pennsylvania for bussing “pseudo-patients” to clinics to obtain unnecessary prescriptions for oxycodone, which they gave to the conspirators in exchange for cash payments. A physician in that state was sentenced to 30 years in prison, $200,000 restitution and a $25,000 fine for running a pill mill that distributed “over 500,000 pills containing oxycodone, 400,000 pills containing alprazolam, and over 19,000 ounces of cough syrup containing codeine.”

The OIG report said that one of its most important tasks is oversight of the Medicare Administrative Contractors (MACs) that receive “billions of dollars” from CMS and are responsible for administering much of the Medicare program. The OIG was critical of MAC performance and of CMS oversight as well. The report found that MACs failed to meet one quarter of the quality standards and that 27 percent of previously unmet standards had not been met as of 2012. CMS is expected to require action plans for correction of all deficiencies, but failed to do so for 12 percent of them. The OIG was also critical of CMS’ lack of analysis of reports obtained from Medicare Advantage plans and its failure to require Part D providers to report suspected fraud and abuse and to implement corrective action plans. Twenty eight percent of them did not file any such reports from 2010 through 2012. To compound matters, on the data it did receive, the report noted that “CMS did not perform quality assurance checks on the data or use them to monitor or oversee the Part D program.”

The OIG has warned providers that the use of “copy and paste” in electronic health records (EHRs) increases the likelihood of fraudulent documentation and billing, but the OIG has found that “CMS and its contractors have not adjusted their practices for identifying and investigating fraud in EHRs” and that they are generally incapable of detecting fraudulent documentation. Only one quarter of hospitals even had policies on acceptable use of copy and paste. The OIG also had concerns about vulnerabilities in state Medicaid information systems which they found were “systemic and pervasive.” State officials blamed lack of funds to improve information system security but there was also a lack of policies and procedures.

For CYs 2009 through 2011, the OIG found that Medicare paid $91.6 million for Part B services and $29 million in Part D drug costs on behalf of “unlawfully present beneficiaries” (undocumented aliens) who are not eligible for Medicare coverage. What’s worse is the fact that CMS did not notify contactors when it discovered that claims were paid for ineligible persons. As a result contractors could not initiate recoupment efforts. Similarly, during the same time period Medicare improperly paid $33.6 million for incarcerated beneficiaries (prisons are responsible for these costs) and in 2011 paid $23 million for services billed after the death of a beneficiary. Managed care plans accounted for fully 86% of post-expiration payments and 251 providers were identified who had large numbers of such claims. No mention is made of referral for fraud investigation for these infractions.

The OIG has recommended expansion of the three day DRG window (which bundles most outpatient services provided by the hospital on the day of and three days prior to admission into the Part A claim) to a ten-day look back period. The OIG performed a study that showed that Medicare would save $263 million if it did so, “but [fortunately for hospitals] CMS has not sought authority to do so.”

In the area of nursing home care, review of skilled nursing facility (SNF) records by OIG physicians showed that 59% of adverse and “temporary harm” events were preventable and were cause by “substandard treatment, inadequate resident monitoring, and failure or delay of necessary care.” According to OIG estimates, 22 percent of SNF residents experienced an adverse even and half that many suffered temporary harm. Half of SNF residents experiencing such events are admitted to hospitals at an estimated cost of $2.8 billion in FY 2011.  “Because many of the events that we identified were preventable, our study confirms the need and opportunity for SNFs to significantly reduce the incidence of resident harm events.” Overall in FY 2011, one quarter of nursing home residents were admitted to hospitals at a cost of $14.3 billion. The most common reason for admission was septicemia. The worst offenders were SNFs in Arkansas, Louisiana, Mississippi, and Oklahoma and those with three stars or less based on CMS 5 star rating system.

In other findings, the OIG found Noridian overpaid hospitals $1.1 million over four years because the hospitals coded their Part A claims as discharges to home when in fact the patients received post-acute care. This should have resulted in reduced payments to the hospitals based on a graduated per diem payment for transfer DRGs but at the time Noridian’s system edits were not working. This has reportedly been fixed, but hospitals were warned that they need to use discharge status codes properly. There were $17 million in overpayments for sleep studies (polysomnography), including claims submitted by 180 providers with “questionable billing” for two overnight stays on the same day.

Two prominent medical device manufacturers were also censured: Gemzyme Corporation agreed to pay $22.3 million to resolve false claims charges arising from its recommendations to physician and hospitals that they use Seprafilm in an unapproved manner. In another successful action, Boston Scientific Corporation paid $30 million after it and its Guidant subsidiaries pleaded guilty of knowingly selling defective cardiac defibrillators that were implanted in patients.

The OIG report contains details of additional actions should alert providers to risk areas that require their attention. Honest providers should applaud its efforts to prevent and punish fraud. These criminals are stealing money that should be available to pay for medically necessary care.

About the Author

Steven J. Meyerson, MD, is senior vice president of the Regulations and Education Group at AccretivePAS® Clinical Solutions. He is Board Certified in Internal Medicine and Geriatrics. Prior to coming to Accretive, Dr. Meyerson practiced primary care medicine in Miami and served as medical director of care management at Baptist Hospital of Miami.

Contact the Author

SMeyerson@accretivehealth.com

To comment on this article go to editor@racmonitor.com

Read the Report

 http://oig.hhs.gov/reports-and-publications/archives/semiannual/2014/SAR-S14-Web-Final.pdf

Steven J. Meyerson, MD, CHCQM-PHYADV

Steven Meyerson, MD, CHCQM-PHYADV, is the founder of Steven Meyerson Consulting. Dr. Meyerson is a nationally recognized expert and consultant in the physician advisor role, case management, and hospital Medicare compliance. He is board certified in internal medicine and geriatrics and serves on the board of the American College of Physician Advisors (ACPA). He edits and writes for the ACPA online blog.

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