Work Plan O I

Work Plan O  I
U.S. Department of Health and Human Services
Office of Inspector General
Work Plan
for Fiscal Year 2014
O IG
Activities
http://oig.hhs.gov
Introductory Message From
the Office of Inspector General
T
he U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Work Plan
for fiscal year (FY) 2014 (Work Plan) summarizes new and ongoing reviews and activities that OIG
plans to pursue with respect to HHS programs and operations during the current fiscal year (FY) and
beyond.
What is our responsibility?
Our organization was created to protect the integrity of HHS programs and operations and the
well-being of beneficiaries by detecting and preventing fraud, waste, and abuse; identifying
opportunities to improve program economy, efficiency, and effectiveness; and holding accountable those
who do not meet program requirements or who violate Federal laws. Our mission encompasses the
more than 300 programs administered by HHS at agencies such as the Centers for Medicare & Medicaid
Services (CMS), National Institutes of Health (NIH), Food and Drug Administration (FDA), Centers for
Disease Control and Prevention (CDC), and Administration for Children and Families (ACF).
The majority of our resources are directed toward safeguarding the integrity of the Medicare and
Medicaid programs and the health and welfare of their beneficiaries. Consistent with our responsibility
to oversee all HHS programs, we also focus considerable effort on HHS’s other programs and
management processes, including key issues such as food and drug safety, child support enforcement,
conflict-of-interest and financial disclosure policies, and the integrity of contracts and grants
management processes and transactions.
How and where do we operate?
Our staff members are deployed throughout the Nation in regional and field offices and in the
Washington, DC, headquarters. We conduct audits, evaluations, and investigations; provide guidance to
industry; and, when appropriate, impose civil monetary penalties, assessments, and administrative
sanctions. We collaborate with HHS and its operating and staff divisions, the Department of Justice
(DOJ) and other executive branch agencies, Congress, and States to bring about systemic changes,
successful prosecutions, negotiated settlements, and recovery of funds. The following are descriptions
of our mission-based components.
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The Office of Audit Services (OAS). OAS provides auditing services for HHS, either by conducting
audits with its own audit resources or by overseeing audit work done by others. Audits examine the
performance of HHS programs and/or its grantees and contractors in carrying out their respective
responsibilities and are intended to provide independent assessments of HHS programs and
operations. These assessments help reduce waste, abuse, and mismanagement and promote
economy and efficiency throughout HHS.
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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.
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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 and the District of Columbia, OI actively coordinates with DOJ and
other Federal, State, and local law enforcement authorities. The investigative efforts of OI often lead
to criminal convictions, administrative sanctions, or CMPs.
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The Office of Counsel to the Inspector General (OCIG). OCIG provides general legal services to OIG,
rendering advice and opinions on HHS programs and operations and providing all 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, program exclusion, and civil monetary penalty
cases. In connection with these cases, OCIG also negotiates and monitors corporate integrity
agreements. OCIG renders advisory opinions, issues compliance program guidance, publishes fraud
alerts, and provides other guidance to the health care industry concerning the anti-kickback statute
and other OIG enforcement authorities.
The organizational entities described above are supported by the Immediate Office of the Inspector
General (IO) and the Office of Management and Policy (OMP).
How do we plan our work?
Work planning is a dynamic process, and adjustments are made throughout the year to meet priorities
and to anticipate and respond to emerging issues with the resources available. We assess relative risks
in the programs for which we have oversight authority to identify the areas most in need of attention
and, accordingly, to set priorities for the sequence and proportion of resources to be allocated. In
evaluating proposals for the Work Plan, we consider a number of factors, including:
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mandatory requirements for OIG reviews, as set forth in laws, regulations, or other directives;
requests made or concerns raised by Congress, HHS management, or the Office of Management and
Budget (OMB);
top management and performance challenges facing HHS;
work to be performed in collaboration with partner organizations;
management’s actions to implement our recommendations from previous reviews; and
timeliness.
What do we accomplish?
For FY 2013, we reported expected recoveries of over $5.8 billion consisting of nearly $850 million in
audit receivables and about $5 billion in investigative receivables, which include about $1 billion in nonHHS investigative receivables resulting from our work in areas such as the States’ shares of Medicaid
restitution. We also identified about $19.4 billion in savings estimated for FY 2013 on the basis of priorperiod legislative, regulatory, or administrative actions that were supported by OIG recommendations.
Such estimates generally reflect third-party projections (such as those by the Congressional Budget
Office or HHS actuaries) made at the time the action was taken. Actual savings may be higher or lower.
We reported FY 2013 exclusions of 3,214 individuals and entities from participation in Federal health
care programs; 960 criminal actions against individuals or entities that engaged in crimes against HHS
programs; and 472 civil actions, which include false claims and unjust-enrichment lawsuits filed in
Federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related
to provider self-disclosure matters.
What can you learn from our Work Plan?
The OIG Work Plan outlines our current focus areas and states the primary objectives of each project.
The word “new” after a project title indicates the project did not appear in the previous Work Plan.
At the end of each project description, we provide the internal identification code for the review (if a
number has been assigned), the year in which we expect one or more reports to be issued as a result of
the review, and whether the work was in progress at the start of the fiscal year or is planned as a new
start. Typically, a review designated as “work in progress” will result in reports issued in FY 2014, but a
review designated as “new start,” meaning it is slated to begin in FY 2014, could result in an FY 2014 or
FY 2015 report, depending upon the time when the assignments are initiated during the year and the
complexity and scope of the examinations.
The body of the Work Plan is followed by Appendix A, which describes our reviews related to the Patient
Protection and Affordable Care Act of 2010 (Affordable Care Act) and Appendix B, which describes our
oversight of the funding that HHS received under the American Recovery and Reinvestment Act of 2009
(Recovery Act).
Because we make continuous adjustments to the Work Plan as appropriate, we do not provide status
reports on the progress of the reviews. However, if you have other questions about this publication,
please contact our Office of External Affairs at (202) 619-1343.
OIG on the Web: http://www.oig.hhs.gov
Follow us on Twitter: http://twitter.com/OIGatHHS
http://oig.hhs.gov
HHS OIG Work Plan | FY 2014
Table of Contents
Page i
Contents
Medicare Part A and Part B ............................................... 1
Hospitals ..................................................................................................................................... 1
Hospital-Related Policies and Practices .....................................................................................................1
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Reconciliations of outlier payments .................................................................................................................. 1
New inpatient admission criteria (new)............................................................................................................. 2
Medicare costs associated with defective medical devices (new) ..................................................................... 2
Analysis of salaries included in hospital cost reports (new) .............................................................................. 2
Impact of provider-based status on Medicare billing ........................................................................................ 2
Comparison of provider-based and free-standing clinics (new) ........................................................................ 2
Critical access hospitals—Payment policy for swing-bed services ..................................................................... 3
Critical access hospitals—Beneficiary costs for outpatient services .................................................................. 3
Long-term-care hospitals—Billing patterns associated with interrupted stays ................................................. 3
Hospitals—Billing and Payments ...............................................................................................................4
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Inpatient claims for mechanical ventilation ....................................................................................................... 4
Selected inpatient and outpatient billing requirements .................................................................................... 4
Duplicate graduate medical education payments ............................................................................................. 4
Outpatient dental claims ................................................................................................................................... 4
Outpatient evaluation and management services billed at the new-patient rate (new) ................................... 5
Nationwide review of cardiac catheterization and heart biopsies (new)........................................................... 5
Payments for patients diagnosed with kwashiorkor (new) ................................................................................ 5
Bone marrow or stem cell transplants (new) .................................................................................................... 5
Indirect medical education payments (new) ..................................................................................................... 6
Hospitals—Quality of Care and Safety .......................................................................................................6
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Participation in projects with quality improvement organizations .................................................................... 6
Oversight of pharmaceutical compounding (new) ............................................................................................ 6
Hurricane Sandy—Case study of hospitals' emergency preparedness and response (new).............................. 7
Oversight of hospital privileging (new) .............................................................................................................. 7
inpatient rehabilitation facilities—Adverse events in post-acute care for Medicare beneficiaries ................... 7
Nursing Homes ........................................................................................................................... 8
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Medicare Part A billing by skilled nursing facilities (new) .................................................................................. 8
Questionable billing patterns for Part B services during nursing home stays .................................................... 8
State agency verification of deficiency corrections ........................................................................................... 8
Program for national background checks for long-term-care employees .......................................................... 8
Hospitalizations of nursing home residents for manageable and preventable conditions ................................ 9
Hospices ...................................................................................................................................... 9
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Hospice in assisted living facilities (new) ........................................................................................................... 9
Hospice general inpatient care .......................................................................................................................... 9
Home Health Services............................................................................................................... 10
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Home health prospective payment system requirements ............................................................................... 10
Employment of individuals with criminal convictions ..................................................................................... 10
HHS OIG Work Plan | FY 2014
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Medical Equipment and Supplies ............................................................................................. 10
Equipment and Supplies—Policies and Practices ....................................................................................11
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Reasonableness of Medicare’s fee schedule amounts for selected medical equipment items compared to
amounts paid by other payers (new) ............................................................................................................... 11
Power mobility devices—Lump-sum purchase versus rental (new) ................................................................ 11
Parenteral nutrition—Reasonableness of Medicare payments compared to payments by other payers ....... 11
Competitive bidding for medical equipment items and services—Mandatory postaward audit .................... 11
Competitive bidding for diabetes testing supplies—Mandatory market share review (new) ......................... 12
Equipment and Supplies—Billing and Payments .....................................................................................12
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Power mobility devices—Supplier compliance with payment requirements .................................................. 12
Power mobility devices—Add-on payment for face-to-face examination (new) ............................................. 12
Lower limb prosthetics—Supplier compliance with payment requirements................................................... 12
Nebulizer machines and related drugs—Supplier compliance with payment requirements (new) ................ 13
Frequently replaced supplies—Supplier compliance with medical necessity, frequency, and other
requirements ................................................................................................................................................... 13
Diabetes testing supplies—Supplier compliance with payment requirements for blood glucose test
strips and lancets ............................................................................................................................................. 13
Diabetes testing supplies—Effectiveness of system edits to prevent inappropriate payments for
blood-glucose test strips and lancets to multiple suppliers ............................................................................. 14
Other Providers and Suppliers .................................................................................................. 14
Other Providers—Policies and Practices ..................................................................................................14
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Ambulance services—Portfolio report on Medicare Part B payments (new) .................................................. 14
Ambulatory surgical centers—Payment system .............................................................................................. 15
End-stage renal disease facilities—Payment system for renal dialysis services and drugs .............................. 15
Rural health clinics—Compliance with location requirements ........................................................................ 15
Other Providers—Billing and Payments ...................................................................................................15
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Ambulance services—Questionable billing, medical necessity, and level-of-transport ................................... 15
Anesthesia services—Payments for personally performed services ................................................................ 16
Chiropractic services—Portfolio report on Medicare Part B payments (new) ................................................. 16
Chiropractic services—Part B payments for noncovered services ................................................................... 16
Chiropractic services—Questionable billing and maintenance therapy (new) ................................................ 17
Diagnostic radiology—Medical necessity of high-cost tests ............................................................................ 17
Electrodiagnostic testing—Questionable billing .............................................................................................. 17
Evaluation and management services—Inappropriate payments ................................................................... 17
Imaging services—Payments for practice expenses ........................................................................................ 18
Laboratory tests—Billing characteristics and questionable billing .................................................................. 18
Ophthalmologists—Questionable billing ......................................................................................................... 18
Partial hospitalization programs—Services in hospital outpatient departments and community mental
health centers .................................................................................................................................................. 18
Physicians and suppliers—Noncompliance with assignment rules and excessive billing of beneficiaries ....... 19
Physicians—Place-of-service coding errors ..................................................................................................... 19
Physical therapists—High utilization of outpatient physical therapy services ................................................. 19
Portable x-ray equipment—Supplier compliance with transportation and setup fee requirements (new)..... 20
Sleep disorder clinics—High utilization of sleep-testing procedures ............................................................... 20
Other Providers—Quality of Care and Safety ..........................................................................................20
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End-stage renal disease—Dialysis facility survey cycle (new) ......................................................................... 20
Mental health providers—Medicare enrollment and credentialing (new) ...................................................... 20
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Prescription Drugs .................................................................................................................... 21
Prescription Drugs—Policies and Practices..............................................................................................21
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Manufacturer reporting of average sales prices for Part B drugs (new) .......................................................... 21
Comparison of average sales prices to average manufacturer prices .............................................................. 21
Part B payments for drugs purchased under the 340B Program (new) ........................................................... 21
Prescription Drugs—Billing and Payments ..............................................................................................22
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Payments for immunosuppressive drug claims with KX modifiers .................................................................. 22
Payments for outpatient drugs and administration of the drugs..................................................................... 22
Prescription Drugs—Quality of Care and Safety ......................................................................................22
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Covered uses for Medicare Part B drugs (new)................................................................................................ 22
Payment for compounded drugs under Medicare Part B (new) ...................................................................... 23
Ethics—Conflicts of interest involving prescription drug compendia .............................................................. 23
Part A and Part B Contractors ................................................................................................... 23
Oversight of Contracts .............................................................................................................................24
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Contract management at the Centers for Medicare & Medicaid Services....................................................... 24
Administrative costs claimed by Medicare contractors ................................................................................... 24
Executive compensation benchmark (new) ..................................................................................................... 24
Contractor pension cost requirements ............................................................................................................ 24
Contractor postretirement benefits and supplemental employee retirement plan costs ............................... 25
Contractor Functions and Performance...................................................................................................25
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Medicare administrative contractors—Use and evaluation of local edits ....................................................... 25
Medicare benefit integrity contractors' activities (new) .................................................................................. 25
ZPICs and PSCs—Identification and collection status of Medicare overpayments (new) ................................ 25
Information Technology Security, Protected Health Information, and Data Accuracy............ 26
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Medicare contractor information systems security programs—Annual report to congress ............................ 26
Security of portable devices containing personal health information ............................................................. 26
Controls over networked medical devices at hospitals (new) ......................................................................... 26
Accuracy of the Physician Compare Web site (new) ........................................................................................ 27
Other Part A and Part B Program Management Issues ............................................................ 27
Beneficiary Eligibility................................................................................................................................27
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Payments for incarcerated beneficiaries.......................................................................................................... 27
Provider Eligibility ....................................................................................................................................27
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Enhanced enrollment screening process for Medicare providers.................................................................... 27
Idle Medicare provider records (new) ............................................................................................................. 28
Payments to providers subject to debt collection ........................................................................................... 28
Medicare as Secondary Payer ..................................................................................................................28
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Improper Medicare payments for beneficiaries with other insurance coverage ............................................. 28
HHS OIG Work Plan | FY 2014
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Medicare Part C and Part D .............................................29
Part C – Medicare Advantage ................................................................................................... 29
MA Organization’s Compliance With Part C Requirements .....................................................................29
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Encounter data—CMS oversight of data integrity ........................................................................................... 29
Risk adjustment data—Sufficiency of documentation supporting diagnoses.................................................. 29
Part D – Prescription Drug Program ......................................................................................... 30
Medicare, Sponsor, and Manufacturer Policies and Practices .................................................................30
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Savings potential of adjusting risk corridors .................................................................................................... 30
Savings potential of retail pharmacy discount generic drug programs ............................................................ 30
Comparison of Medicare Part D and Medicaid pharmacy reimbursement and rebates (new) ....................... 30
Program integrity—Manufacturer safeguards to prevent the use of copayment coupons for drugs
paid for by Part D ............................................................................................................................................. 31
Sponsor Compliance With Part D Requirements .....................................................................................31
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Documentation of administrative costs in sponsors’ bid proposals ................................................................ 31
Reconciliation of payments—Sponsor reporting of direct and indirect remuneration.................................... 31
Reconciliation of payments—Reopening final payment determinations ........................................................ 31
Ensuring dual eligibles’ access to drugs under Part D ...................................................................................... 32
Part D Billing and Payments .....................................................................................................................32
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Documentation of pharmacies’ prescription drug event data (new) ............................................................... 32
Duplicated and/or unsupported claims ........................................................................................................... 32
Questionable utilization patterns for HIV drugs .............................................................................................. 32
Quality of sponsor data used in calculating coverage-gap discounts............................................................... 32
Medicaid Program ........................................................... 34
Medicaid Prescription Drug Reviews ........................................................................................ 34
State and Manufacturer Compliance With Medicaid Requirements .......................................................34
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States' use of Medicaid drug utilization review to reduce the inappropriate dispensing of opioids ............... 34
States’ methods for resolving rebate disputes with manufacturers ................................................................ 34
Manufacturer compliance with AMP reporting requirements ........................................................................ 34
States’ collection and reporting of rebates ...................................................................................................... 35
Rebates for new formulations of existing drugs .............................................................................................. 35
States collection of rebates on physician-administered drugs......................................................................... 35
State Claims for Federal Reimbursement ................................................................................................36
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Medicaid payments for multiuse vials of Herceptin (new) .............................................................................. 36
Quality of Care and Safety of Beneficiaries..............................................................................................36
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Atypical antipsychotic drugs prescribed for children in Medicaid ................................................................... 36
HHS OIG Work Plan | FY 2014
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Home Health Services and Other Community–Based Care ..................................................... 36
Billing and Payments ................................................................................................................................36
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Home health services—provider and beneficiary eligibility ............................................................................ 36
Adult day health care services ......................................................................................................................... 37
Continuing day treatment mental health services ........................................................................................... 37
State Claims for Federal Reimbursement ................................................................................................37
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Room and board costs associated with HCBS waiver program payments ....................................................... 37
Quality of Care and Safety of Beneficiaries..............................................................................................38
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Home health services—Screenings of health care workers ............................................................................. 38
Other Medicaid Services, Equipment and Supplies.................................................................. 38
Policies and Practices ...............................................................................................................................38
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Medical equipment and supplies—Opportunities to reduce Medicaid payment rates for selected items ..... 38
Billing and Payments ................................................................................................................................38
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Transportation services—Compliance with Federal and State requirements .................................................. 38
Questionable billing for outpatient mental health services by medicaid providers ........................................ 39
Health-care-acquired conditions—Prohibition on Federal reimbursements ................................................... 39
State Claims for Federal Reimbursement ................................................................................................39
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Dental services for children—Inappropriate billing ......................................................................................... 39
Family planning services—Claims for enhanced Federal funding .................................................................... 39
Quality of Care and Safety of Beneficiaries..............................................................................................40
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Access to pediatric dental care for children enrolled in Medicaid ................................................................... 40
Utilization of preventive screening services for children enrolled in Medicaid (new) .................................... 40
State Management of Medicaid ............................................................................................... 40
State Mechanisms to Fund Their Medicaid Programs .............................................................................40
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State use of provider taxes to generate Federal funding ................................................................................. 40
State compliance with Federal Certified Public Expenditures regulations....................................................... 41
State Claims for Federal Reimbursement ................................................................................................41
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State allocation of Medicaid administrative costs ........................................................................................... 41
State-operated facilities—Reasonableness of payment rates ......................................................................... 41
State cost allocations that deviate from acceptable practices ......................................................................... 41
Enhanced Federal Medical Assistance Percentage (new) ................................................................................ 42
Medicaid eligibility enrollment—National error rates ..................................................................................... 42
Medicaid eligibility determinations in selected States (new) .......................................................................... 42
State Adjustments of Federal Reimbursement ........................................................................................42
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State Medicaid monetary drawdowns—Reconciliation with Form CMS-64 .................................................... 42
State reporting of Medicaid collections on Form CMS-64 ............................................................................... 43
Estate recoveries—Compliance and reporting of recovered costs .................................................................. 43
State use of incorrect FMAP for Federal share adjustments (new) ................................................................. 43
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State Program Integrity Activities and Compliance With Federal Requirements ....................................43
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State actions to address vulnerabilities identified during CMS reviews .......................................................... 43
State terminations of providers terminated by Medicare or by other States .................................................. 44
Recovering Medicaid overpayments—Credit balances in Medicaid patient accounts .................................... 44
State collection and verification of provider ownership information .............................................................. 44
States' experiences with enhanced provider screening ................................................................................... 45
Provider payment suspensions during pending investigations of credible fraud allegations (new) ................ 45
OIG Oversight of State Medicaid Fraud Control Units .............................................................................45
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Reviews of State Medicaid Fraud Control Units ............................................................................................... 45
States and Territories without Medicaid Fraud Control Units (new) ............................................................... 45
Medicaid Information System Controls and Security ............................................................... 46
Controls to Prevent Improper Medicaid Payments .................................................................................46
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Inactive or invalid provider identifier numbers ............................................................................................... 46
Duplicate payments for beneficiaries with multiple Medicaid identification numbers ................................... 46
States' use of PARIS data matching to reduce improper payments ................................................................. 46
National Correct Coding Initiative edits and CMS oversight (new) .................................................................. 47
Controls to Ensure the Security of Medicaid Systems and Information ..................................................47
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CMS oversight of States' Medicaid information systems security controls (new)............................................ 47
Medicaid Managed Care ........................................................................................................... 47
State Payments to Managed Care Entities ...............................................................................................48
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Medicaid managed care reimbursement (new) ............................................................................................... 48
Medical loss ratio—Managed care plans’ refunds to States ............................................................................ 48
Data Collection and Reporting .................................................................................................................48
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Completeness and accuracy of managed care encounter data ....................................................................... 48
Program Integrity in Managed Care.........................................................................................................49
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Medicaid managed care entities’ identification of fraud and abuse ............................................................... 49
Beneficiary Protections in Managed Care................................................................................................49
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Beneficiary access to services under medicaid managed care ........................................................................ 49
Medicaid managed care beneficiary grievances and appeals process............................................................. 49
Oversight of managed care entities’ marketing practices................................................................................ 50
CMS-Related Legal and Investigative Activities ...............51
Legal Activities .......................................................................................................................... 51
Exclusions From Program Participation ...................................................................................................51
Civil Monetary Penalties ..........................................................................................................................51
False Claims Act Cases and Corporate Integrity Agreements ..................................................................52
Providers’ Compliance With Corporate Integrity Agreements ................................................................52
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Advisory Opinions and Other Industry Guidance ....................................................................................52
Provider Compliance Training ..................................................................................................................52
Provider Self-Disclosure ...........................................................................................................................53
Investigative Activities .............................................................................................................. 53
Medicare Fraud Strike Force Teams and Other Collaboration .................................................................54
Public Health Reviews .....................................................56
Agency for Healthcare Research and Quality ........................................................................... 57
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AHRQ—Early implementation of patient safety organizations ........................................................................ 57
Centers for Disease Control and Prevention ............................................................................ 57
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CDC—World Trade Center Health program: review of medical claims (new) ................................................. 57
CDC—Oversight of HIV/AIDS prevention and research grants ......................................................................... 57
CDC—Award process for the President’s Emergency Plan for AIDS Relief cooperative agreements ............... 57
CDC—Accountability for property (new) ......................................................................................................... 58
CDC—Oversight of security of the strategic national stockpiles of pharmaceuticals ...................................... 58
Food and Drug Administration ................................................................................................. 58
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FDA—Inspection of generic drug manufacturers (new) .................................................................................. 58
Health Resources and Services Administration ........................................................................ 59
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HRSA—Contract pharmacy arrangements in the 340B Program ..................................................................... 59
HRSA—340B-covered entities access to 340B ceiling prices (new) ................................................................. 59
Indian Health Service ................................................................................................................ 59
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IHS—Hospital oversight (new) ......................................................................................................................... 59
National Institutes of Health .................................................................................................... 60
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NIH—Superfund financial activities for fiscal year 2013 .................................................................................. 60
NIH—Extramural construction grants .............................................................................................................. 60
NIH—Colleges’ and universities’ compliance with cost principles ................................................................... 60
NIH—Oversight of grants management policy implementation ...................................................................... 60
NIH—Use of appropriated funds for contracting (new)................................................................................... 60
Substance Abuse and Mental Health Services Administration................................................ 61
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SAMHSA—Reporting and oversight of the Substance Abuse Treatment Block Grant program performance . 61
Other Public-Health-Related Reviews ...................................................................................... 61
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Hurricane Sandy—HHS use of volunteer medical personnel to respond (new) .............................................. 61
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Hurricane Sandy—Social Services Block Grant guidance, disbursement, and reporting summary (new) ...... 61
Public Health Legal Activities .................................................................................................... 62
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Violations of select agent requirements .......................................................................................................... 62
Human Services Reviews.................................................63
Administration for Children and Families ................................................................................. 63
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CSGB—Compliance with monitoring and reporting requirements (new) ....................................................... 63
TANF—Compliance and oversight of work participation verification and reporting requirements ................. 64
CCDF—Child Care Development Fund direct services ..................................................................................... 64
CCDF—Child Care Development Fund targeted funds ..................................................................................... 64
CCDF—Licensing and oversight of health and safety standards at Federally funded facilities ........................ 64
Foster care and adoption assistance maintenance payments (new) ............................................................... 65
Foster care—State oversight and coordination of health services for children ............................................... 65
Child support enforcement—State and local protection of child support information ................................... 65
Child support enforcement—Investigations under the child-support enforcement task force model ............ 65
Administration for Community Living....................................................................................... 66
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ACL—Senior Medicare Patrol projects’ performance data .............................................................................. 66
Other HHS-Related Reviews ............................................67
Financial Statement Audits and Related Reviews..................................................................... 67
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Audit of fiscal year 2014 consolidated HHS financial statements and financial-related reviews ..................... 67
Fiscal year 2014 Centers for Medicare & Medicaid Services’ financial statements ......................................... 68
Financial Reviews ...................................................................................................................... 68
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Compliance with improper payment reporting requirements......................................................................... 68
Evaluation of predictive analytics for reducing improper payments ............................................................... 68
HHS contract management review .................................................................................................................. 69
HHS agencies’ annual accounting of drug-control funds ................................................................................. 69
The President’s Emergency Plan for AIDS Relief funds .................................................................................... 69
OIG reviews of non-Federal audits .................................................................................................................. 69
OIG reimbursable audits of non-HHS funds ..................................................................................................... 70
Requests for audit services .............................................................................................................................. 70
Automated Information Systems .............................................................................................. 70
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HHS compliance with the Federal Information Security Management Act of 2002 ........................................ 70
Information systems security audits ................................................................................................................ 70
Penetration testing of hhs and opdiv networks (new) ..................................................................................... 70
Other HHS-Related Issues ......................................................................................................... 71
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HHS efforts to address grantee risks ................................................................................................................ 71
HHS OIG Work Plan | FY 2014
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Table of Contents
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HHS efforts to prevent the use of HHS grant funds for lobbying activities ...................................................... 71
Hurricane Sandy—HHS internal controls for oversight of funds (new)............................................................ 71
Review of fiscal year 2012 conference expenditures (new)............................................................................. 72
HHS’s Government purchase, travel, and integrated charge card programs (new) ......................................... 72
Appendixes
A – Affordable Care Act Reviews, p. 75
B – Recovery Act Reviews, p. 83
HHS OIG Work Plan | FY 2014
Table of Contents
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http://oig.hhs.gov
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 1
Medicare Part A and Part B
Medicare Part A helps cover certain inpatient services in hospitals and skilled nursing facilities (SNF) and
some home health services. Medicare Part B helps cover designated practitioners’ services; outpatient
care; and certain other medical services, equipment, supplies, and drugs that Part A does not cover.
Historically, the Centers for Medicare & Medicaid Services (CMS) has contracted with fiscal
intermediaries (FI) and carriers to conduct Medicare’s claims administration functions. Pursuant to
Medicare’s contracting reform initiative, FIs and carriers are being replaced by Medicare Administrative
Contractors (MAC).
Fiscal intermediaries have processed claims for Part A and Part B submitted by or on behalf of certain
facility-based providers, including hospitals and skilled nursing facilities. Carriers have processed claims
for Part B submitted by designated practitioners and other suppliers, such as physicians, laboratories,
and retail pharmacies. The Centers for Medicare & Medicaid Services (CMS) also engages contractors
that perform specific fee-for-service (FFS) business functions. MACs process both Part A and Part B
claims. CMS is implementing the Medicare contracting reform initiative. The reform plan includes
specialty MACs that service suppliers of durable medical equipment. (Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA), § 911).
Descriptions of the Office of Inspector General’s (OIG) work in progress and planned reviews of Medicare
Part A and Part B payments and services for fiscal year (FY) 2013 follow.
Hospitals
Acronyms and Abbreviations for Selected Terms:
CAH—critical access hospital
CoP—conditions of participation (in Medicare)
DRG—diagnosis related group
MAC—Medicare Administrative Contractor
IPPS—inpatient prospective payment system
PPS—prospective payment system
Hospital-Related Policies and Practices
 Reconciliations of outlier payments
Policies and Practices. We will review Medicare outlier payments to hospitals to determine whether
CMS performed necessary reconciliations in a timely manner to enable Medicare contractors to
perform final settlement of the hospitals’ associated cost reports. We will also determine whether
the Medicare contractors referred all hospitals that meet the criteria for outlier reconciliations to
CMS. Context—Outliers are additional payments that Medicare provides to hospitals for
beneficiaries who incur unusually high costs. CMS reconciles outlier payments on the basis of the
most recent cost-to-charge ratio from hospitals’ associated cost reports. Outlier payments also may
be adjusted to reflect the time value of money for overpayments and underpayments. Without
reconciliations and final settlements, the cost reports remain open and funds may not be properly
returned to the Medicare Trust Fund. (42 CFR, § 412.84(i)(4).) (OAS; W-00-13-35451; W-00-1435451; various reviews; expected issue date: FY 2014; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 2
 New inpatient admission criteria (new)
Policies and Practices. We will determine the impact of new inpatient admission criteria on hospital
billing, Medicare payments, and beneficiary payments. This review will also determine how billing
varied among hospitals in FY 2014. Context—Previous OIG work found overpayments for short
inpatient stays, inconsistent billing practices among hospitals, and financial incentives for billing
Medicare inappropriately. Beginning in FY 2014, new criteria state that physicians should admit for
inpatient care those beneficiaries who are expected to need at least 2 nights of hospital
care. Beneficiaries whose care is expected to last less than 2 nights should be treated as
outpatients. The criteria represent a substantial change in the way hospitals bill for inpatient and
outpatient stays. (OEI; 00-00-00000; expected issue date: FY 2015; new start)
 Medicare costs associated with defective medical devices (new)
Policies and Practices. We will review Medicare claims to identify the costs resulting from additional
utilization of medical services associated with defective medical devices and determine the impact
of the cost on the Medicare Trust Fund. Context—CMS has previously expressed concerns about the
impact of the cost of replacement devices, including ancillary cost, on Medicare payments for
inpatient and outpatient services. (OAS; W-00-13-35516; various reviews; expected issue date:
FY 2014; work in progress)
 Analysis of salaries included in hospital cost reports (new)
Policies and Practices. We will review data from Medicare cost reports and hospitals to identify
salary amounts included in operating costs reported to and reimbursed by Medicare. We will
determine the potential impact on the Medicare Trust Fund if the amount of employee
compensation that could be submitted to Medicare for reimbursement on future cost reports had
limits. Context—Employee compensation may be included in allowable provider costs only to the
extent that it represents reasonable remuneration for managerial, administrative, professional, and
other services related to the operation of the facility and furnished in connection with patient
care. (CMS’s Provider Reimbursement Manual, Part 1, Pub. No. 15-1, Ch. 9 § 902.2.) Medicare does
not provide any specific limits on the salary amounts that can be reported on the hospital cost
report. (OAS; W-00-13-35715; W-00-14-35713; expected issue date: FY 2015; work in progress)
 Impact of provider-based status on Medicare billing
Policies and Practices. We will determine the impact of subordinate facilities in hospitals billing
Medicare as being hospital based (provider based) and the extent to which such facilities meet
CMS’s criteria. Context—Provider-based status allows a subordinate facility to bill as part of the
main provider. Provider-based status can result in additional Medicare payments for services
furnished at provider-based facilities and may increase beneficiaries’ coinsurance liabilities. In 2011,
the Medicare Payment Advisory Commission (MedPAC) expressed concerns about the financial
incentives presented by provider-based status and stated that Medicare should seek to pay similar
amounts for similar services. (OEI; 04-12-00380; 04-12-00381; expected issue date: FY 2014; work
in progress)
 Comparison of provider-based and free-standing clinics (new)
Policies and Practices. We will review and compare Medicare payments for physician office visits in
provider-based clinics and free-standing clinics to determine the difference in payments made to the
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 3
clinics for similar procedures and assess the potential impact on the Medicare program of hospitals'
claiming provider-based status for such facilities. Context—Provider-based facilities often receive
higher payments for some services than do freestanding clinics. The requirements to be met for a
facility to be treated as a provider-based facility are at 42 CFR § 413.65(d). (OAS; W-00-14-35724;
expected issue date: FY 2014; new start)
 Critical access hospitals—Payment policy for swing-bed services
Policies and Practices. We will compare reimbursement for swing-bed services at critical access
hospitals (CAHs) to the same level of care obtained at traditional skilled nursing facilities (SNF) to
determine whether Medicare could achieve cost savings through a more cost effective payment
methodology. Context—Swing beds are inpatient beds that can be used interchangeably for either
acute care or skilled nursing services. The Balanced Budget Act of 1997 (BBA) created the CAH
Program to ensure access to health care services in rural areas. The Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 (MMA) allowed CAHs to receive Medicare
reimbursement equal to 101 percent of reasonable cost and have up to 25 inpatient beds that could
be used for acute care or swing-bed services, with CMS approval. (Social Security Act, § 1814(l).)
Neither the BBA nor the MMA established any length-of-stay limits for swing-bed utilization. Unlike
CAHs, traditional SNFs are reimbursed under a PPS through case-mix, adjusted per-diem prospective
payment rates for all SNFs. The payment rates represent payment in full for all costs associated with
furnishing covered SNF services to Medicare beneficiaries. (OAS; W-00-12-35101; W-00-13-35101;
W-00-14-35101; various reviews; expected issue date: FY 2014; work in progress)
 Critical access hospitals—Beneficiary costs for outpatient services
Policies and Practices. We will determine the costs to Medicare beneficiaries for outpatient services
received at CAHs. Context—In 1997, the Balance Budget Act created the CAH certification to ensure
that hospital care was accessible to beneficiaries in rural communities. Small hospitals that meet
specific requirements can qualify for the CAH certification and receive favorable Medicare
reimbursements. Medicare reimburses CAHs at 101 percent of their reasonable costs for services
provided. However, beneficiaries who receive outpatient services at CAHs pay coinsurance amounts
that are computed on the basis of CAHs’ submitted charges, rather than the costs of the services.
(Social Security Act, § 1820(c)(2)(B).) (OEI; 05-12-00085; expected issue date: FY 2014; work in
progress)
 Long-term-care hospitals—Billing patterns associated with interrupted stays
Policies and Practices. We will identify readmission patterns in long-term-care hospitals (LTCHs) to
determine the extent to which LTCHs readmit patients after a certain number of days, thereby billing
Medicare for higher paying new stays and separate payments instead of for interrupted stays. We
will also determine the extent to which co-located LTCHs readmit patients from the providers with
which they are co-located. We will also determine the extent to which Medicare made improper
payments associated with readmissions in long-term-care hospitals (LTCH) in 2011. Context—Prior
OIG work identified vulnerabilities in CMS’s ability to detect readmissions and appropriately pay the
readmissions as interrupted stays instead of as higher paying new admissions. LTCHs are generally
defined as inpatient acute care hospitals with an average length of stay greater than 25 days. An
interrupted stay occurs when a patient leaves the LTCH for treatment and services that are not
available at the LTCH and returns within a specific number of days. If patients return to the LTCH
after a specific number of days, the stays are billed as new admissions rather than interrupted stays
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 4
and the LTCHs will receive two Medicare payments. (42 CFR § 412.531.) (OEI; 04-12-00490;
expected issue date: FY 2014; work in progress)
Hospitals—Billing and Payments
 Inpatient claims for mechanical ventilation
Billing and Payments. We will review Medicare payments for inpatient hospital claims with certain
Medicare Severity-Diagnosis Related Group (MS-DRG) assignments that require mechanical
ventilation to determine whether hospitals’ DRG assignments and resultant Medicare payments
were appropriate. Context—Mechanical ventilation is the use of a ventilator or respirator to take
over active breathing for a patient. Claims must be completed accurately to be processed correctly
and promptly. (CMS’s Medicare Claims Processing Manual, Pub. No. 100 04, ch. 1, § 80.3.2.2.) For
certain DRGs to qualify for Medicare coverage, a patient must receive 96 or more hours of
mechanical ventilation. Our review will include claims for beneficiaries who received over 96 hours
of mechanical ventilation. Previous OIG reviews identified improper payments made because
hospitals inappropriately billed for beneficiaries who did not receive 96 or more hours of mechanical
ventilation. (OAS; W-00-14-35575; various reviews; expected issue date: FY 2015; work in progress)
 Selected inpatient and outpatient billing requirements
Billing and Payments. We will review Medicare payments to acute care hospitals to determine
hospitals’ compliance with selected billing requirements and recommend recovery of overpayments.
We will also survey or interview hospitals’ leadership and compliance officers to provide contextual
information related to hospitals’ compliance programs. Context—Prior OIG audits, investigations,
and inspections have identified areas at risk for noncompliance with Medicare billing requirements.
Our review will focus on those hospitals with claims that may be at risk for overpayments. (OAS;
W-00-12-35538; W-00-13-35538; W-00-14-35538; various reviews; expected issue date: FY 2014;
work in progress and new start)
 Duplicate graduate medical education payments
Billing and Payments. We will review provider data from CMS’s Intern and Resident Information
System (IRIS) to determine whether hospitals received duplicate or excessive graduate medical
education (GME) payments. We will also assess the effectiveness of IRIS in preventing duplicate
payments for GME costs. If duplicate payments were claimed, we will determine which payment
was appropriate. Context—Prior OIG reviews have determined that hospitals have received
duplicate reimbursement for GME costs. Medicare pays teaching hospitals for direct graduate
medical education (DGME) and indirect medical education (IME) costs. In calculating payments for
DGME and IME costs, no intern or resident may be counted by Medicare as more than one
full-time-equivalent (FTE) employee. (42 CFR §§ 413.78(b) and 412.105(f)(1)(iii).) The primary
purpose of IRIS is to ensure that no intern or resident is counted as more than one FTE. (OAS;
W-00-13-35432; W-00-14-35432; various reviews; expected issue date: FY 2014; work in progress)
 Outpatient dental claims
Billing and Payments. We will review Medicare hospital outpatient payments for dental services to
determine whether such payments were made in accordance with Medicare requirements.
Context— Current OIG audits have indicated that hospitals received Medicare reimbursement for
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 5
noncovered dental services, resulting in significant overpayments. Dental services are generally
excluded from Medicare coverage, with a few exceptions. (Social Security Act, § 1862(a)(12).) For
example, Medicare reimbursement is allowed for the extraction of teeth to prepare the jaw for
radiation treatment (CMS’s Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15, § 150). (OAS;
W-00-13-35603; W-00-14-35432; various reviews; expected issue date: FY 2014; work in progress)
 Outpatient evaluation and management services billed at the new-patient rate
(new)
Billing and Payments. We will review Medicare outpatient payments made to hospitals for
evaluation and management (E/M) services for clinic visits billed at the new-patient rate to
determine whether they were appropriate and recommend recovery of overpayments.
Context—Preliminary work identified overpayments that occurred because hospitals used newpatient codes when billing for services to established patients. The rate at which Medicare pays for
evaluation and management services requires hospitals to identify patients as either new or
established, depending on previous encounters with the hospital. According to Federal regulations,
the meaning of “new” and “established’ pertains to whether the patient has been seen as a
registered inpatient or outpatient of the hospital within the past 3 years. (73 Fed. Reg. 68679
(November 18, 2008).) (OAS; W-00-12-35627; W-00-14-35627; expected issue date: FY 2014;
work in progress)
 Nationwide review of cardiac catheterization and heart biopsies (new)
Billing and Payments. We will review Medicare payments for right heart catheterizations (RHC) and
heart biopsies billed during the same operative session and determine whether hospitals complied
with Medicare billing requirements. Context—Previous OIG reviews have identified inappropriate
payments when hospitals were paid for separate RHC procedures when the services were already
included in payments for heart biopsies. To be processed correctly and promptly, a bill must be
completed accurately. (CMS’s Medicare Claims Processing Manual, Pub. No. 100-04, ch. 1,
§80.3.2.2.) (OAS; W-00-14-35721; various reviews; expected issue date: FY 2015; new start)
 Payments for patients diagnosed with kwashiorkor (new)
Billing and Payments. We will review Medicare payments made to hospitals for claims that include a
diagnosis of Kwashiorkor to determine whether the diagnosis is adequately supported by
documentation in the medical record. Context—To be processed correctly and promptly, a bill must
be completed accurately. (CMS’s Medicare Claims Processing Manual, Pub. No. 100-04, ch. 1,
§80.3.2.2.) A diagnosis of Kwashiorkor on a claim substantially increases the hospitals’
reimbursement from Medicare. Kwashiorkor is a form of severe protein malnutrition that generally
affects children living in tropical and subtropical parts of the world during periods of famine or
insufficient food supply. It is typically not found in the United States. Prior OIG reviews have
identified inappropriate payments to hospitals for claims with a Kwashiorkor diagnosis.
(OAS; W-00-13-35715; W-00-14-35715; various reviews; expected issue date: FY 2014; work in
progress)
 Bone marrow or stem cell transplants (new)
Billing and Payments. We will review Medicare payments made to hospitals for bone marrow or
stem cell transplants to determine whether Medicare payments were paid in accordance with
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 6
Federal rules and regulations. Context—Bone marrow or peripheral blood stem cell transplantation
is a process that includes mobilization, harvesting, and transplant of bone marrow or peripheral
blood stem cells and the administration of high dose chemotherapy or radiotherapy prior to the
actual transplant. When bone marrow or peripheral blood stem cell transplantation is covered, all
necessary steps are included in coverage. (CMS’s Medicare Claims Processing Manual, Pub. No. 10004, ch. 3, §90.3.) Transplantations are covered under Medicare only for specific diagnoses.
Procedure codes must be accompanied with by the diagnosis codes that meet specified coverage
criteria. Prior OIG reviews have identified hospitals that have incorrectly billed for bone marrow or
stem cell transplants. (OAS; W-00-14-35723; expected issue date: FY 2014; new start)
 Indirect medical education payments (new)
Billing and Payments. We will review provider data to determine whether hospitals’ indirect medical
education (IME) payments were made in accordance with Federal regulations and guidelines. We
will determine whether the IME payments were calculated properly. Context—Prior OIG reviews
have determined that hospitals have received excess reimbursement for IME costs. Teaching
hospitals with residents in approved graduate medical education programs receive additional
payments for each Medicare discharge to reflect the higher indirect patient care costs of teaching
hospitals relative to those of nonteaching hospitals. (42 U.S.C. § 1395ww(d)(5)(B).) The additional
payments, known as the IME adjustments, are calculated using the hospital’s ratio of resident
full-time equivalents to available beds. (OAS; W-00-14-35722; expected issue date: FY 2014; new
start)
Hospitals—Quality of Care and Safety
 Participation in projects with quality improvement organizations
Quality of Care and Safety. We will determine the extent and nature of hospitals' participation in
quality improvement projects with Quality Improvement Organizations (QIO). We will also
determine the extent to which QIOs’ quality improvement projects in hospitals overlap with projects
offered by other entities. Context—CMS is required to enter into contracts with QIOs, formerly
called utilization and quality control peer review organizations. (Social Security Act § 1862 (g).) The
purpose of the QIOs is to improve the efficiency, effectiveness, economy, and quality of services
delivered to Medicare beneficiaries. Medicare will spend about $1.3 billion in the current 3-year QIO
contract period, and each contract specifies clinical areas for quality improvement projects. (OEI;
01-12-00650; expected issue date: FY 2014; work in progress)
 Oversight of pharmaceutical compounding (new)
Quality of Care and Safety. We will describe Medicare’s oversight of pharmaceutical compounding in
Medicare-participating acute care hospitals. We will also describe how State agencies and hospital
accreditors assess such pharmacy services in hospitals. Context—Pharmaceutical compounding is
the creation of a prescription drug tailored to meet the needs of an individual patient. Most
hospitals compound at least some pharmaceuticals onsite. Medicare oversees the safety of
pharmaceuticals compounded at Medicare participating hospitals through the accreditation and
certification process. This work is particularly important in view of a recent meningitis outbreak
resulting from contaminated injections of compounded drugs. (OEI; 01-13-00400; expected issue
date: FY 2014; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 7
 Hurricane Sandy—Case study of hospitals' emergency preparedness and
response (new)
Quality of Care and Safety. We will assess and describe hospital preparedness and response during
Hurricane Sandy. Specifically, we will assess the emergency preparedness of hospitals in selected
counties affected, including the hospitals’ participation in the Public Health Emergency Preparedness
Cooperative Agreements program funded through the Centers for Disease Control and Prevention
and the Hospital Preparedness Program funded through the Office of the Assistant Secretary for
Preparedness and Response. Context—CMS’s Conditions of Participation (CoPs) require that
hospitals develop and maintain a hospital environment that ensures the safety and well-being of
patients and have adequate medical and nursing staff during disasters. (CFR § 482.41 and CFR
§ 482.55(b)(2).) CoPs must be met for hospitals to participate in Medicare. (OEI; 06-13-00260;
expected issue date: FY 2014; work in progress)
 Oversight of hospital privileging (new)
Quality of Care and Safety. We will determine how hospitals assess medical staff candidates prior to
granting initial privileges, including verification of credentials and review of the National Practitioner
Databank. Context—Hospitals that participate in Medicare must have an organized medical staff
that periodically appraises its members (42 CFR § 482.22). A hospital's governing body must ensure
that the members of the medical staff, including physicians and other licensed independent
practitioners, are accountable for the quality of care provided to patients. Robust hospital
privileging programs contribute to patient safety. (OEI; 06-13-00410; expected issue date: FY 2015;
work in progress)
 inpatient rehabilitation facilities—Adverse events in post-acute care for
Medicare beneficiaries
Quality of Care and Safety. We will estimate the national incidence of adverse and temporary harm
events for Medicare beneficiaries receiving postacute care in inpatient rehabilitation facilities
(IRF). We will also identify factors contributing to these events, determine the extent to which the
events were preventable, and estimate the associated costs to Medicare. Context—IRFs are
inpatient facilities that provide intensive rehabilitation therapy to patients recovering from illness,
injury, or surgery, typically consisting of at least 3 hours of therapy per day. Upon discharge from the
hospital, IRF residents often require extensive services to improve functioning before returning
home. IRFs provide 11 percent of postacute facility care and have experienced rapid growth over the
last decade. IRF care accounted for $7 billion in Medicare expenditures in 2011. (OEI; 06-14-00110;
expected issue date: FY 2015; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 8
Nursing Homes
Acronyms and Abbreviations for Selected Terms:
IRF—inpatient rehabilitation facility
SNF—skilled nursing facility
 Medicare Part A billing by skilled nursing facilities (new)
Policies and Practices. We will describe SNF billing practices in selected years and will describe
variation in billing among SNFs in those years. Context—Prior OIG work found that SNFs increasingly
billed for the highest level of therapy even though beneficiary characteristics remained largely
unchanged. OIG also found that SNFs billed one-quarter of all 2009 claims in error, resulting in $1.5
billion in inappropriate Medicare payments. CMS has made substantial changes to how SNFs bill for
services for Medicare Part A stays. (OEI; 02-13-00610; 00-00-0000; various reviews; expected issue
date: FY 2014; work in progress)
 Questionable billing patterns for Part B services during nursing home stays
Billing and Payments. We will identify questionable billing patterns associated with nursing homes
and Medicare providers for Part B services provided to nursing home residents during stays not paid
under Part A (for example, stays during which benefits are exhausted or the 3-day prior-inpatientstay requirement is not met). A series of studies will examine several broad categories of services,
such as foot care. Context—Congress explicitly directed OIG to monitor Part B billing for abuse
during non-Part A stays. (Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act
of 2000 (BIPA), § 313.) (OEI; 06-14-00160; various reviews; expected issue date: FY 2014; work in
progress)
 State agency verification of deficiency corrections
Quality of Care and Safety—We will determine whether State survey agencies verified correction
plans for deficiencies identified during nursing home recertification surveys. Context—A prior OIG
review found that one State survey agency did not always verify that nursing homes corrected
deficiencies identified during surveys in accordance with Federal requirements. Federal regulations
require nursing homes to submit correction plans to the State survey agency or CMS for deficiencies
identified during surveys. (42 CFR § 488.402(d).) CMS requires State survey agencies to verify the
correction of identified deficiencies through onsite reviews or by obtaining other evidence of
correction. (State Operations Manual, Pub. No. 100-07, § 7300.3.) (OAS; W-00-13-35701; W-00-1435101; various reviews; expected issue date: FY 2014; work in progress)
 Program for national background checks for long-term-care employees
Quality of Care and Safety. We will review the procedures implemented by participating States for
long-term-care facilities or providers to conduct background checks on prospective employees and
providers who would have direct access to patients and determine the costs of conducting
background checks. We will determine the outcomes of the States' programs and determine
whether the programs led to any unintended consequences. Contex—This mandated work is
ongoing and will be issued at the program's conclusion as required. (Affordable Care Act, § 6401.)
(OEI; 07-10-00420; expected issue date: FY 2017; work in progress; Affordable Care Act)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 9
 Hospitalizations of nursing home residents for manageable and preventable
conditions
Quality of Care and Safety—We will determine the extent to which Medicare beneficiaries residing in
nursing homes are hospitalized as a result of conditions thought to be manageable or preventable in
the nursing home setting. Context—A 2013 OIG review found that 25 percent of Medicare
beneficiaries were hospitalized for any reason in FY 2011. Hospitalizations of nursing home residents
are costly to Medicare and may indicate quality-of-care problems in the nursing homes. (OEI; 06-1100041; expected issue date: FY 2014; work in progress)
Hospices
Acronyms and Abbreviations for Selected Terms:
CoPs—(Medicare) conditions of participation
 Hospice in assisted living facilities (new)
Policies and Practices. We will review the extent to which hospices serve Medicare beneficiaries
who reside in assisted living facilities (ALFs). We will determine the length of stay, levels of care
received, and common terminal illnesses of beneficiaries who receive hospice care in ALFs.
Context—Pursuant to the Affordable Care Act, § 3132, CMS must reform the hospice payment
system, collect data relevant to revising hospice payments, and develop quality measures for
hospices. Our work is intended to provide HHS with information relevant to these requirements.
Medicare covers hospice services for eligible beneficiaries under Medicare Part A. (Social Security
Act, § 1812(a).) Hospice care may be provided to individuals and their families in various settings,
including the beneficiary’s place of residence, such as an ALF. ALF residents have the longest lengths
of stay in hospice care. The Medicare Payment Advisory Commission has said that these long stays
bear further monitoring and examination. (OEI; 02-14-00070; expected issue date: FY 2014; work in
progress; Affordable Care Act)
 Hospice general inpatient care
Quality of Care and Safety. We will review the use of hospice general inpatient care. We will assess
the appropriateness of hospices’ general inpatient care claims and the content of election
statements for hospice beneficiaries who receive general inpatient care. We will also review hospice
medical records to address concerns that this level of hospice care is being misused.
Context—Hospice care is palliative rather than curative. When a beneficiary elects hospice care, the
hospice agency assumes the responsibility for medical care related to the beneficiary’s terminal
illness and related conditions. Federal regulations address Medicare conditions of participation for
hospices. (42 CFR Part 418.) Beneficiaries may revoke their election of hospice care and return to
standard Medicare coverage at any time. (42 CFR § 418.28.) (OEI; 02-10-00491;
02-10-00492; expected issue date: FY 2014; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 10
Home Health Services
Acronyms and Abbreviations for Selected Terms:
CoP—(Medicare) conditions of participation
HHA—home health agency
PPS—prospective payment system
 Home health prospective payment system requirements
Billing and Payments. We will review compliance with various aspects of the home health
prospective payment system (PPS), including the documentation required in support of the claims
paid by Medicare. We will determine whether home health claims were in paid in accordance with
Federal laws and regulations. Context—A prior OIG report found that one in four HHAs had
questionable billing. Further, CMS designated newly enrolling HHAs as high-risk providers, citing
their record of fraud, waste, and abuse. Since 2010, nearly $1 billion in improper Medicare
payments and fraud has been identified relating to the home health benefit. Some beneficiaries
who are confined to their homes are eligible to receive home health services. (Social Security Act,
§§ 1835(a)(2)(A) and 1861(m).) Such services include part-time or intermittent skilled nursing care,
as well as other skilled care services, such as physical, occupational, and speech therapy; medical
social work; and home health aide services. (OAS; W-00-13-35501; W-00-14-35501; various reviews;
expected issue date: FY 2014; work in progress and new start)
 Employment of individuals with criminal convictions
Quality of Care and Safety. We will determine the extent to which home health agencies (HHAs) are
complying with State requirements for conducting criminal background checks on HHA applicants
and employees. Context—A previous OIG review found that 92 percent of nursing homes employed
at least one individual with at least one criminal conviction; however, this review could not
determine whether the nursing home employees should have been disqualified from working in
nursing homes because OIG did not have access to detailed information on the nature of the
employees’ crimes. Federal law requires that HHAs comply with all applicable State and local laws
and regulations. (Social Security Act, §1891(a)(5), implemented at 42 CFR § 484.12(a).) Nearly all
States have laws prohibiting certain health-care-related entities from employing individuals with
prohibited criminal convictions. (OEI; 07-14-00130; expected issued date: FY 2015; work in
progress)
Medical Equipment and Supplies
Acronyms and Abbreviations for Selected Terms:
CBA—Competitive Bidding Areas
E/M—evaluation and management (services)
LCD—local coverage determination
PMD—power mobility device
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
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Equipment and Supplies—Policies and Practices
 Reasonableness of Medicare’s fee schedule amounts for selected medical
equipment items compared to amounts paid by other payers (new)
Policies and Practices. The review will determine the reasonableness of the Medicare fee schedule
amount for various medical equipment items, including commode chairs, folding walkers, and
transcutaneous electrical nerve stimulators. We will compare Medicare payments made for various
medical equipment items to the amounts paid by non-Medicare payers, such as private insurance
companies and the Department of Veterans Affairs (VA), to identify potentially wasteful
spending. We will estimate the financial impact on the Medicare program and on beneficiaries of
aligning the fee schedule payments for the various Items with those of non-Medicare
payers. Context—Prior OIG work found that Medicare overpays for various types of medical
equipment. Federal statutes and regulations authorize CMS to determine whether the standard
methods of determining the fee schedule amounts have resulted in unreasonably high or low
payment amounts for particular items or services. If CMS determines that the standard methods of
determining fee schedule amounts for certain categories of items or services will result in "grossly
deficient or excess amounts," CMS may replace the current fee schedule amounts with special
payment limits that are reasonable and equitable. (42 CFR § 405.502(g)(1)(ii) - (iii).) (OAS; W-00-1435462; expected issue date: FY 2015; new start)
 Power mobility devices—Lump-sum purchase versus rental (new)
Policies and Practices. We will determine whether potential savings can be achieved by Medicare if
certain poer mobility devices (PMDs) are rented over a 13-month period rather than acquired
through a lump-sum purchase. (OAS; W-14-35461; expected issue date: FY 2015; new start)
 Parenteral nutrition—Reasonableness of Medicare payments compared to
payments by other payers
Policies and Practices. We will determine the reasonableness of Medicare reimbursement rates for
Parenteral Nutrition compared to amounts paid by other payers. Context—Previous OIG work found
that Medicare allowances for parenteral nutrition averaged 45 percent higher than Medicaid prices,
78 percent higher than prices available to Medicare risk-contract health maintenance organizations
(HMO), and 11 times higher than some manufacturers’ contract prices. Parenteral nutrition is the
practice of feeding a person intravenously to replace the function of a permanently inoperative or
malfunctioning internal organ and is covered under the prosthetic device benefit of the Social
Security Act, § 1861(s)(8). In 2009, Medicare paid more than $137 million for parenteral nutrition
supplies. (OEI; 04-12-00640; expected issue date: FY 2015; work in progress)
 Competitive bidding for medical equipment items and services—Mandatory
postaward audit
Policies and Practices. We will review the process CMS used to conduct competitive bidding and to
make subsequent pricing determinations for certain medical equipment items and services in
selected competitive bidding areas under rounds 1 and 2 of the competitive bidding program.
Context—Federal law requires OIG to conduct postaward audits to assess this process. (Medicare
Improvements for Patients and Providers Act of 2008 (MIA), § 154(a)(1)(E).) (OAS; W-00-12-35241;
W-00-13-35241; various reviews; expected issued date: FY 2014; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 12
 Competitive bidding for diabetes testing supplies—Mandatory market share
review (new)
Policies and Practices. We will determine the market share of different types of diabetic testing
strips immediately following implementation of Round 2 of the Competitive Bidding Program.
Context—The Medicare Improvements for Patients and Providers Act (MIA) requires OIG to
complete a review to determine the market share of diabetic testing strip types and to submit it to
the Secretary of HHS before each subsequent round of the Competitive Bidding Program. MIA
requires that in rounds subsequent to the Round 1 Rebid of the Competitive Bidding program,
contracts for mail order diabetic testing strips be awarded to suppliers that provide at least
50 percent, by volume, of all types of diabetic testing strips. (OEI; 04-13-00680; 04-13-00681; 04-1300682; expected issue date: FY 2014; work in progress)
Equipment and Supplies—Billing and Payments
 Power mobility devices—Supplier compliance with payment requirements
Billing and Payments. We will review Medicare Part B payments for suppliers of power mobility
devices (PMD) to determine whether such payments were in accordance with Medicare
requirements. We will focus particularly on whether Medicare payments for PMD claims submitted
by medical equipment suppliers are medically necessary and are supported in accordance with
requirements at 42 CFR § 410.38. (OAS; W-00-13-35706; various reviews; expected issue date:
FY 2014; work in progress)
 Power mobility devices—Add-on payment for face-to-face examination (new)
Billing and Payments. We will review Medicare Part B payments for PMD to determine whether the
Medicare requirements for a face-to-face examination were met. Context—Medicare requires that
the treating physician, when prescribing a PMD, conduct a face-to-face examination to determine
the medical necessity of the PMD and write a prescription for the PMD. (42 CFR § 410.38(c)(2).) To
receive compensation for conducting the face-to-face examination, the prescribing physician can bill
for an evaluation and management (E/M) service and has the option of billing Medicare for an addon payment for the sole purpose of documenting the need for the PMD. Prior OIG work found that
when the prescribing physician did not bill the code for the add-on payment in addition to the
evaluation and management (E/M) code, the resulting PMD claim was likely to be
unallowable. (OAS; W-00-14-35460; expected issue date: FY 2014; work in progress)
 Lower limb prosthetics—Supplier compliance with payment requirements
Billing and Payments. We will review Medicare Part B payments for claims submitted by medical
equipment suppliers for lower limb prosthetics to determine whether the requirements of CMS’s
Benefits Policy Manual, Pub. No. 100-02, ch. 15, § 120, were met. Context—A national OIG review of
suppliers of lower limb prosthetics identified 267 suppliers that had questionable billing. Earlier OIG
work found that suppliers frequently submitted claims that did not meet certain Medicare
requirements; were for beneficiaries with no claims from their referring physicians; and had other
questionable billing characteristics (e.g., billing for lower limb prostheses for a high percentage of
beneficiaries with no history of amputations or missing limbs). Such claims are questionable and, if
determined to be improper, should not be paid by Medicare. Payments to service providers are
precluded unless the provider has and furnishes upon request the information necessary to
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 13
determine the amounts due. (Social Security Act, §1833(e).) Medicare does not pay for items or
services that are “not reasonable and necessary.” (Social Security Act, § 1862(a)(1)(A).)
(OAS; W-00-13-35702; various reviews; expected issue date: FY 2014; work in progress)
 Nebulizer machines and related drugs—Supplier compliance with payment
requirements (new)
Billing and Payments. We will review Medicare Part B payments for nebulizer machines and related
drugs to determine whether medical equipment suppliers’ claims are for nebulizers and related
drugs that are medically necessary and are supported in accordance with Medicare
requirements. Context—Prior OIG work found that suppliers were overpaid approximately $46
million for inhalation drugs used with nebulizer machines. Medicare requires that such items be
"reasonable and necessary." (Social Security Act § 1862(a)(1)(A).) Further, the local coverage
determinations (LCD) issued by the four Medicare contractors that process medical equipment and
supply claims contain utilization guidelines and documentation requirements. (OAS; W-00-1435465; expected issue date: FY 2015; new start)
 Frequently replaced supplies—Supplier compliance with medical necessity,
frequency, and other requirements
Billing and Payments. We will review claims for frequently replaced medical equipment supplies to
determine whether medical necessity, frequency, and other Medicare requirements are met.
Context—Prior OIG work found that suppliers automatically shipped continuous positive airway
pressure system and respiratory-assist device supplies when no physician orders for refills were
in effect. Such claims are improper and should not be submitted to Medicare for payment. For
supplies and accessories used periodically, orders or certificates of medical necessity must specify
the type of supplies needed and the frequency with which they must be replaced, used, or
consumed. (CMS’s Medicare Program Integrity Manual, Pub. 100-08, ch. 5, §§ 2.3 and 5.9.)
Beneficiaries or their caregivers must specifically request refills of repetitive services and/or supplies
before suppliers dispense them. (CMS’s, Medicare Claims Processing Manual, Pub. 100-04, ch. 20,
§ 200.) Suppliers may not initiate refills of orders, and suppliers must not automatically dispense a
quantity of supplies on a predetermined regular basis. Medicare does not pay for items or services
that are “not reasonable and necessary.” (Social Security Act, § 1862(a)(1)(A).)
(OAS; W-00-13-35240; various reviews; expected issue date: FY 2015; new start)
 Diabetes testing supplies—Supplier compliance with payment requirements
for blood glucose test strips and lancets
Billing and Payments. We will review Medicare Part B payments for home blood glucose test strips
and lancet supplies to determine their appropriateness. Context—Prior OIG reviews determined
that suppliers of diabetic related supplies did not always comply with Federal requirements. As
reflected in the local coverage determinations (LCD) issued by the Medicare contactors that process
medical equipment and supply claims, physicians’ orders for items billed to Medicare must include
certain elements and be retained by the suppliers to support billing for the services. Suppliers of
diabetes testing supplies are required to add a modifier code on claims to identify when a patient is
treated with insulin or not treated with insulin. The amount of supplies allowable for Medicare
reimbursement differs depending on the applicable service code modifier. Medicare does not pay
for items or services that are not “reasonable and necessary.” (Social Security Act, § 1862(a)(1)(A).)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 14
(OAS; W-00-11-35407; W-00-12-35407; various reviews; expected issue date: FY 2014; work in
progress)
 Diabetes testing supplies—Effectiveness of system edits to prevent
inappropriate payments for blood-glucose test strips and lancets to multiple
suppliers
Billing and Payments. We will review Medicare’s claims processing edits (special system controls)
designed to prevent payments to multiple suppliers of home blood-glucose test strips and lancets
and determine whether they are effective in preventing inappropriate payments.
Context—Prior OIG work found that inappropriate payments were made to multiple medical
equipment suppliers for test strips and lancets dispensed to the same beneficiaries with overlapping
service dates. The LCDs issued by the pertinent claims processing contractors state that medical
equipment suppliers may not dispense test strips and lancets until beneficiaries have nearly
exhausted the previously dispensed supplies. The LCDs also require that beneficiaries or their
caregivers specifically request the refills before the suppliers dispense them. Medicare does not pay
for items or services that are not “reasonable and necessary.” (Social Security Act, § 1862(a)(1)(A).)
(OAS; W-00-13-35604; various reviews; expected issue date: FY 2015; work in progress)
Other Providers and Suppliers
Acronyms and Abbreviations for Selected Terms:
CERT—Comprehensive Error Rate Testing (program)
E/M—evaluation and management (services)
ESRD—end-stage renal disease
PHP—partial hospitalization program
PPS—prospective payment system
RHC—rural health clinic
Other Providers—Policies and Practices
 Ambulance services—Portfolio report on Medicare Part B payments (new)
Policies and Practices. We will analyze and synthesize OIG evaluations, audits, investigations, and
compliance guidance related to ground ambulance transport services paid by Medicare Part B to
identify vulnerabilities, inefficiencies, and fraud trends and offer recommendations to improve
detected vulnerabilities and minimize inappropriate payments for ambulance services. Context—
Prior OIG work identified fraud schemes and trends indicating overutilization and medically
unnecessary payments. The planned portfolio will offer recommendations to address the
vulnerabilities that we have identified and improve efficiency. Medicare does not pay for items or
services that are “not reasonable and necessary for the diagnosis and treatment of illness of
injury….” (Social Security Act, § 1862(a)(1)(A).) Specifically, ambulance services are covered “where
the use of other methods of transportation is contraindicated by the individual’s condition….”
(§ 1861(s)(7).) The Medicare Benefit Policy Manual, § 10.2.1, more specifically states that Medicare
covers ambulance transports when a beneficiary’s medical condition at the time of the transport is
such that using other means of transportation would endanger the beneficiary’s health. Coverage
requirements and requirements for ambulance suppliers are in 42 CFR §§ 410.40 and 41.
(OIG; OIG-12-14-02; expected issue date: FY 2014; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
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 Ambulatory surgical centers—Payment system
Policies and Practices. We will review the appropriateness of Medicare’s methodology for setting
ambulatory surgical center (ASC) payment rates under the revised payment system. We will also
determine whether a payment disparity exists between the ASC and hospital outpatient department
payment rates for similar surgical procedures provided in both settings. Context—A change in
Federal law required the Secretary to implement a revised payment system for payment of surgical
services furnished in ASCs beginning January 1, 2008. Accordingly, CMS implemented a revised ASC
payment system modeled on the Outpatient Prospective Payment System. (Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA), § 626.) (See also 42 CFR § 416.171.)
(OAS; W-00-10-35423; W-00-11-35423; W-00-12-35423; various reviews; expected issue date:
FY 2014; work in progress)
 End-stage renal disease facilities—Payment system for renal dialysis services
and drugs
Policies and Practices. We will review Medicare payments for and utilization of renal dialysis services
and related drugs pursuant to the new bundled end-stage renal disease (ESRD) prospective payment
system (PPS). We will compare facilities' acquisition costs for certain drugs to inflation-adjusted cost
estimates and determine how costs for the drugs have changed. Context—Previous OIG work found
that data from the Bureau of Labor Statistics (BLS) did not accurately measure changes in facilities’
acquisition costs for high-dollar ESRD drugs. However, CMS has based the ESRD PPS price updates
on wage and price proxy data from the BLS. Effective January 1, 2011, Federal law required CMS to
begin implementation of a new system that bundles all costs related to ESRD care (including drugs
that were previously separately billable) into a single per-treatment payment. (Social Security Act,
§ 1881(b)(14)(A)(i).) The bundled rate must be updated annually to reflect changes in the price of
goods and services used in ESRD care. (75 Fed. Reg. 49030 at page 49151 (Aug. 12, 2010).) (OAS;
W-00-12-35608; W-00-13-35608; various reviews; and OEI; 03-12-00550; expected issue date: FY
2014; work in progress )
 Rural health clinics—Compliance with location requirements
Policies and Practices. We will determine the extent to which Rural Health Clinics (RHCs) do not
meet basic location requirements and the extent to which Medicare reimbursements to such clinics
are occurring. Context—The Balanced Budget Act of 1997 (BBA) authorized CMS to remove from the
RHC program clinics that do not meet location requirements. In 2005, OIG recommended that CMS
promulgate regulations to implement the BBA. However, CMS has yet to promulgate the final
regulations. As a result, RHCs that no longer meet eligibility requirements continue to receive
enhanced Medicare reimbursement. (OEI; 05-13-00290; expected issue date: FY 2014)
Other Providers—Billing and Payments
 Ambulance services—Questionable billing, medical necessity, and level-oftransport
Billing and Payments. We will examine Medicare claims data to assess the extent of questionable
billing for ambulance services, such as transports that potentially never occurred or potentially
medically unnecessary transports to dialysis facilities. We will also determine whether Medicare
payments for ambulance services were made in accordance with Medicare requirements. Context—
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 16
Prior OIG work found that Medicare made inappropriate payments for advanced life support
emergency transports. Medicare pays for emergency and nonemergency ambulance services when
a beneficiary’s medical condition at the time of transport is such that other means of transportation
are contraindicated (i.e., would endanger the beneficiary). (Social Security Act,
§ 1861(s)(7).) Medicare pays for different levels of ambulance service, including Basic Life Support
and Advanced Life Support as well as specialty care transport. (42 CFR § 410.40(b).) (OEI;
09-12-00351; expected issue date: FY 2014; work in progress; and OAS; W-00-11-35574;
W-00-12-35574; various reviews; expected issue date: FY 2014; work in progress)
 Anesthesia services—Payments for personally performed services
Billing and Payments. We will review Medicare Part B claims for personally performed anesthesia
services to determine whether they were supported in accordance with Medicare requirements. We
will also determine whether Medicare payments for anesthesiologist services reported on a claim
with the “AA” service code modifier met Medicare requirements. Context—Physicians report the
appropriate anesthesia modifier code to denote whether the service was personally performed or
medically directed. (CMS, Medicare Claims Processing Manual, Pub. No. 100-04, ch.12, § 50)
Reporting an incorrect modifier on the claim as if services were personally performed when they
were not will result in Mecicare's paying a higher amount. The service code “AA” modifier is used for
anesthesia services personally performed by an anesthesiologist, whereas the QK modifier limits
payment to 50 percent of the Medicare-allowed amount for personally performed services claimed
with the AA modifier. Payments to any service provider are precluded unless the provider has
furnished the information necessary to determine the amounts due. (Social Security Act, §1833(e).)
(OAS; W-00-13-35706; various reviews; expected issue date: FY 2014; new start)
 Chiropractic services—Portfolio report on Medicare Part B payments (new)
Billing and Payments. We will compile the results of prior OIG audits, evaluations, and investigations
of chiropractic services paid by Medicare to identify trends in payment, compliance, and fraud
vulnerabilities and offer recommendations to improve detected vulnerabilities. Context—Prior OIG
work identified inappropriate payments for chiropractic services that were medically unnecessary,
were not documented in accordance with Medicare requirements, or were fraudulent. Medicare
does not pay for items or services that are “not reasonable an d necessary for the diagnosis and
treatment of illness or injury or to improve the functioning of a malformed body member.” (Social
Security Act, § 1862(a)(1)(A).) Part B pays only for a chiropractor’s manual manipulation of the spine
to correct a subluxation if there is a neuro-musculoskeletal condition for which such manipulation is
appropriate treatment. (42 CFR § 410.21(b).) CMS’s Medicare Benefit Policy Manual, Pub. No. 10002, ch. 15, § 30.5, states that chiropractic maintenance therapy is not considered to be medically
reasonable or necessary and is therefore not payable. Further, § 240.1.2 of the Manual establishes
Medicare requirements for documenting chiropractic services. This planned portfolio document will
offer new recommendations to improve Medicare chiropractic vulnerabilities detected in prior OIG
work. (OAS; OIG-12-14-03; expected issue date: FY 2014; work in progress)
 Chiropractic services—Part B payments for noncovered services
Billing and Payments. We will review Medicare Part B payments for chiropractic services to
determine whether such payments were claimed in accordance with Medicare requirements.
Context—Prior OIG work identified inappropriate payments for chiropractic services furnished
during calendar year (CY) 2006. Subsequent OIG work (CY 2013) also identified unallowable
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 17
Medicare payments for chiropractic services. Part B pays only for a chiropractor’s manual
manipulation of the spine to correct a subluxation if there is a neuro-musculoskeletal condition for
which such manipulation is appropriate treatment. (42 CFR § 410.21(b).) Chiropractic maintenance
therapy is not considered to be medically reasonable or necessary and is therefore not payable.
(CMS's Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15, § 30.5B.) Medicare will not pay for
items or services that are “not reasonable and necessary.” (Social Security Act, § 1862(a)(1)(A).)
(OAS; W-00-12-35606; W-00-13-35606; various reviews; expected issue date: FY 2014; work in
progress)
 Chiropractic services—Questionable billing and maintenance therapy (new)
Billing and Payments. We will determine the extent of questionable billing for chiropractic services.
We will also identify trends suggestive of maintenance therapy billing. Context—Previous OIG work
has demonstrated a history of vulnerabilities relative to inappropriate payments for chiropractic
services, including recent work that identified a chiropractor with a 93-percent claim error rate and
inappropriate Medicare payments of about $700,000. Although chiropractors may submit claims for
any number of services, Medicare reimburses claims only for manual manipulations or treatment of
subluxations of the spine that provides "a reasonable expectation of recovery or improvement of
function." Moreover, Medicare does not reimburse for chiropractic maintenance therapy. (CMS’s
Medicare Benefit Policy Manual, Pub. No. 100 02, ch. 15, § 30.5B.) (OEI; 01-14-00200; expected
issue date: FY 2015, work in progress)
 Diagnostic radiology—Medical necessity of high-cost tests
Billing and Payments. We will review Medicare payments for high-cost diagnostic radiology tests to
determine whether they were medically necessary and the extent to which utilization has increased
for these tests. Medicare will not pay for items or services that are not “reasonable and necessary.”
(Social Security Act, § 1862 (a)(1)(A).) (OAS; W-00-12-35454; W-00-13-35454; various reviews;
expected issue date: FY 2015; work in progress)
 Electrodiagnostic testing—Questionable billing
Billing and Payments. We will review Medicare claims data to identify questionable billing for
electrodiagnostic testing and determine the extent to which Medicare utilization rates differ by
provider specialty, diagnosis, and geographic area for these services. Context—Electrodiagnostic
testing, which assists in the diagnosis and treatment of nerve or muscle damage, includes the needle
electromyogram and the nerve conduction test. Coverage for diagnostic testing is provided by the
Social Security act, § 1861(s)(2), and 42 CFR § 410.32.) The use of electrodiagnostic testing for
inappropriate financial gain could pose a growing vulnerability to Medicare. (OEI; 04-12-00420;
expected issue date: FY 2013; work in progress)
 Evaluation and management services—Inappropriate payments
Billing and Payments. We will determine the extent to which selected payments for evaluation and
management (E/M) services were inappropriate. We will also review multiple E/M services
associated with the same providers and beneficiaries to determine the extent to which electronic or
paper medical records had documentation vulnerabilities. Context—Medicare contractors have
noted an increased frequency of medical records with identical documentation across services.
Medicare requires providers to select the billing code for the service on the basis of the content of
the service and to have documentation to support the level of service reported. (CMS’s Medicare
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 18
Claims Processing Manual, Pub. No. 100-04, ch. 12, § 30.6.1.) (OEI; 04-10-00181; 04-10-00182;
expected issue date: FY 2014; work in progress)
 Imaging services—Payments for practice expenses
Billing and Payments. We will review Medicare Part B payments for imaging services to determine
whether they reflect the expenses incurred and whether the utilization rates reflect industry
practices. For selected imaging services, we will focus on the practice expense components,
including the equipment utilization rate. Context—Practice expenses are those such as office rent,
wages, and equipment. Physicians are paid for services pursuant to the Medicare physician fee
schedule, which covers the major categories of costs, including the physician professional cost
component, malpractice costs, and practice expenses. (Social Security Act, § 1848(c)(1)(B).) (OAS;
W-00-12-35219; W-00-13-35219; various reviews; expected issue date: FY 2014; work in progress)
 Laboratory tests—Billing characteristics and questionable billing
Billing and Payments. We will review billing characteristics for Part B clinical laboratory (lab) tests
and identify questionable billing. Context—Medicare is the largest payer of clinical lab services in
the Nation. Medicare’s payments for lab services in 2008 represented an increase of 92 percent over
payments in 1998. In 2010, Medicare paid about $8.2 billion for lab tests, accounting for 3 percent
of all Medicare Part B payments. Much of the growth in lab spending has resulted from the
increased volume of ordered services. Part B covers most lab tests and pays 100 percent of
allowable charges; Medicare beneficiaries do not pay copayments or deductibles for lab tests.
Medicare should pay only for those lab tests that are ordered by a physician or qualified
nonphysician practitioner who is treating a beneficiary. (42 CFR § 410.32(a). (OEI; 03-11-00730;
expected issue date: FY 2013; work in progress)
 Ophthalmologists—Questionable billing
Billing and Payments. We will review Medicare claims data to identify inappropriate payments
and/or questionable billing for ophthalmological services during 2012. We will also determine the
geographic locations of providers exhibiting questionable billing for ophthalmological services in
2012. Context—Medicare payments for Part B for physician services, which include
ophthalmologists, are authorized by the Social Security Act, § 1832(a)(1), and 42 CFR § 410.20. In
2010, Medicare allowed over $6.8 billion for services provided by ophthalmologists.
(OEI; 04-12-00280; expected issue date: FY 2014; work in progress)
 Partial hospitalization programs—Services in hospital outpatient departments
and community mental health centers
Billing and Payments. We will review Medicare payments for partial hospitalization program
(PHP) psychiatric services in hospital outpatient departments and freestanding community mental
health centers (CMHC) to determine whether Medicare requirements were met, with a focus on
supporting documentation, including patient plans of care and physician supervision and
certification. Context—Prior OIG reviews have identified inappropriate payments made for PHP
services provided by CMHCs. PHPs are intensive outpatient programs of psychiatric services
provided to individuals in lieu of inpatient psychiatric care. The programs include individualized,
coordinated, comprehensive, and multidisciplinary treatment involving nurses, psychiatrists,
psychologists, and social workers. Medicare coverage of PHP services is provided by the Social
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 19
Security Act, § 1832(a)(2)(J), and requirements for payment are in CMS’s Medicare Claims Processing
Manual, Pub. 100-04, ch. 4, § 260, and at 42 CFR §§ 410.43 and 424.24(e). (OAS; W-00-13-35453;
W-00-14-35453; various reviews; expected issue date: FY 2014; work in progress)
 Physicians and suppliers—Noncompliance with assignment rules and excessive
billing of beneficiaries
Billing and Payments. We will review the extent to which physicians and suppliers participated in
Medicare and accepted claim assignment during 2012. We will also assess the effects of their
participation and claim assignments on the Medicare program (such as noncompliance with
assignment rules) and on beneficiaries (such as excessive billing of beneficiaries’ share of charges).
Context—Physicians participating in Medicare agree to accept payment on “assignment” for all items
and services furnished to individuals enrolled in Medicare. (Social Security Act, § 1842(h)(1).) CMS
defines “assignment” as a written agreement between beneficiaries, their physicians or other
suppliers, and Medicare. The beneficiary agrees to allow the physician or other supplier to request
direct payment from Medicare for covered Part B services, equipment, and supplies by assigning the
claim to the physician or other supplier. The physician or other supplier in return agrees to accept
the Medicare-allowed amount indicated by the carrier as the full charge for the items or services
provided. (OEI; 07-12-00570; expected issue date: FY 2014; work in progress)
 Physicians—Place-of-service coding errors
Billing and Payments. We will review physicians’ coding on Medicare Part B claims for services
performed in ambulatory surgical centers and hospital outpatient departments to determine
whether they properly coded the places of service. Context— Prior OIG reviews determined that
physicians did not always correctly code nonfacility places of service on Part B claims submitted to
and paid by Medicare contractors. Federal regulations provide for different levels of payments to
physicians depending on where services are performed. (42 CFR § 414.32.) Medicare pays a
physician a higher amount when a service is performed in a nonfacility setting, such as a physician’s
office, than it does when the service is performed in a hospital outpatient department or, with
certain exceptions, in an ambulatory surgical center. (OAS; W-00-11-35113; various reviews;
expected issue date: FY 2014; work in progress)
 Physical therapists—High utilization of outpatient physical therapy services
Billing and Payments. We will review outpatient physical therapy services provided by independent
therapists to determine whether they were in compliance with Medicare reimbursement
regulations. Context—Prior OIG work found that claims for therapy services provided by
independent physical therapists were not reasonable or medically necessary or were not properly
documented. Our focus is on independent therapists who have a high utilization rate for outpatient
physical therapy services. Medicare will not pay for items or services that are not “reasonable and
necessary.” (Social Security Act, § 1862(a)(1)(A).) Documentation requirements for therapy services
are in CMS's, Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15, § 220.3.
(OAS; W-00-11-35220;W-00-12-35220; W-00-13-35220; various reviews; expected issue date:
FY 2014; work in progress and new start)
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 20
 Portable x-ray equipment—Supplier compliance with transportation and setup
fee requirements (new)
Billing and Payments. We will review Medicare payments for the transportation and setup of
portable x-ray equipment to determine whether payments were correct and were supported by
documentation. We will also assess the qualifications of the technologists who performed the
services and determine whether the services were ordered by a physician (e.g., doctor of medicine
or doctor of osteopathy). Context—Prior OIG work found that Medicare improperly paid portable
x-ray suppliers for return trips to nursing facilities (i.e., multiple trips to a facility in 1 day) and for
services ordered by nonphysicians that are not covered by Medicare. Medicare generally reimburses
for transportation and setup of portable x-ray equipment if the conditions for coverage are met. (42
CFR § 486, §§ 486.100 – 486.110.) (OAS; W-00-14-35464; various reviews; expected issue date:
FY 2015; new start)
 Sleep disorder clinics—High utilization of sleep-testing procedures
Billing and Payments. We will examine Medicare payments to physicians, hospital outpatient
departments, and independent diagnostic testing facilities for sleep-testing procedures to assess the
appropriateness of Medicare payments for high utilization sleep-testing procedures and determine
whether they were in accordance with Medicare requirements. Context—An OIG analysis of CY
2010 Medicare payments for Current Procedural Terminology (CPT) codes 95810 and 95811, which
totaled approximately $415 million, showed high utilization associated with these sleep-testing
procedures. Medicare will not pay for items or services that are not “reasonable and necessary.”
(Social Security Act, § 1862(a)(1)(A).) Diagnostic testing that is duplicative of previous testing done
by the attending physician to the extent the results are still pertinent is not covered because it is not
reasonable and necessary under 1862(a)(1)(A) of the Act. Requirements for coverage of sleep tests
under Part B are in CMS’s Medicare Benefit Policy Manual, Pub. No. 100-02, ch. 15, § 70. (OAS;
W-00-10-35521; W-00-12-35521; various reviews; expected issue date: FY 2014; work in progress)
Other Providers—Quality of Care and Safety
 End-stage renal disease—Dialysis facility survey cycle (new)
Quality of Care and Safety. We will determine the extent, nature, and outcomes of Medicare’s
survey and certification process of dialysis facilities. Context—State Agencies (SAs) conduct onsite
surveys of dialysis facilities on behalf of CMS. (Social Security Act, § 1864.) When performing onsite
surveys, the SAs use CMS’s guidelines to ensure facilities’ compliance with Medicare’s Conditions for
Coverage. SAs cite a deficiency when they determine that facilities are not meeting statutory or
regulatory requirements. Researchers have raised concerns that the SA survey process falls short in
identifying poorly performing facilities. (OEI; 01-11-00551; expected issue date: FY 2015; work in
progress)
 Mental health providers—Medicare enrollment and credentialing (new)
Quality of Care and Safety. We will review and describe Medicare’s mental health provider
enrollment and credentialing requirements and assess CMS’s oversight efforts to verify the
qualifications of mental health service providers. We will determine whether selected providers
have the required Federal and State qualifications to bill Medicare for mental health services.
Context—Medicare-covered mental health services are provided by several types of health
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Medicare Part A and Part B
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professionals, including psychiatrists or other physicians; clinical psychologists; clinical social
workers, and clinical nurse specialists. To participate in Medicare, these providers must meet
general Medicare provider enrollment standards as well as specific standards for licensure or
certification within their States of practice. (OEI; 06-13-00560; expected issue date: FY 2014; work
in progress)
Prescription Drugs
Acronyms and Abbreviations for Selected Terms Used in This Section:
AMP—average manufacturer price
ASP—average sales price
AWP—average wholesale price
FDA—Food and Drug Administration
LCD—local coverage determination
WAMP—widely available market price
Prescription Drugs—Policies and Practices
 Manufacturer reporting of average sales prices for Part B drugs (new)
Policies and Practices. We will determine the potential effect on average sales price reporting if all
manufacturers of Part B-covered drugs were required to submit ASPs to CMS. We will also
determine whether CMS has improved its process for collecting ASP data, as we previously
recommended. Context—Previous OIG work found that a number of manufacturers did not provide
ASP data for their Part B drugs to CMS. When setting payment amounts for drugs covered under
Medicare Part B, CMS relies on ASP data reported by manufacturers. With some exceptions,
manufacturers that have Medicaid drug rebate agreements in effect are required to provide CMS
with pricing information, including the ASPs, for their Part B drugs. (Social Security Act, §1927.) We
found that not all manufacturers subject to the requirement complied while nearly one-fifth of the
manufacturers that submitted ASP data to CMS were not required to do so because they did not
have Medicaid rebate agreements in effect. We recommended that CMS seek a legislative change to
directly require all manufacturers of Part B-covered drugs to submit ASPs. (OEI; 12-13-00040;
expected issue date: FY 2014; work in progress)
 Comparison of average sales prices to average manufacturer prices
Policies and Practices. We will review Medicare Part B drug prices by comparing average sales prices
(ASPs) to average manufacturer prices (AMPs) and identify drug prices that exceed a designated
threshold. Context—In 2005, Medicare began paying for most Part B drugs using a
new methodology based on the ASP. The enabling law mandated that OIG compare ASPs with
AMPs. (Social Security Act, § 1847A(d)(2)(B).) Pursuant to the requirement, OIG conducts such
reviews and issues quarterly and annual reports of its findings. When OIG finds that the ASP for a
drug exceeds the AMP by a certain percentage (5 percent), OIG notifies the Secretary of HHS, who
may disregard the ASP for the drug when setting reimbursement amounts (e.g., apply a price
substitution policy). (OEI; 00-00-00000; various studies; expected issue date: FY 2015; new start)
 Part B payments for drugs purchased under the 340B Program (new)
Policies and Practices. We will determine how much Medicare Part B spending could be reduced if
Medicare were able to share in the savings for 340B-purchased drugs. We will calculate the amount
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Medicare Part A and Part B
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by which ASP-based payments exceed 340B prices and estimate potential savings on the basis of
various shared-benefit methodologies. Context—Previous OIG work revealed that some Medicaid
State agencies have developed strategies to take advantage of the discounts on 340B drugs. The
340B Program requires drug manufacturers to provide discounted outpatient drugs to approximately
10,000 covered entities. Medicare Part B reimburses for almost all covered outpatient drugs
(including those purchased by 340B entities) on the basis of the average sales price (ASP), regardless
of the amount paid for the drug. Medicare Part B providers that purchase drugs under the 340B
program can fully retain the difference between the ASP-based payment amount and the 340B
purchase price. (OEI; 12-14-00030; expected issue date: FY2014; work in progress)
Prescription Drugs—Billing and Payments
 Payments for immunosuppressive drug claims with KX modifiers
Billing and Payments. We will determine whether Part B payments for immunosuppressive drugs
that were billed with a service code modifier “KX” met Medicare documentation requirements.
Context— Medicare claims for immunosuppressive drugs reported with the KX modifier may not
always meet the documentation requirements for payment under Part B. Medicare Part B covers
FDA-approved immunosuppressive drugs and drugs used in immunosuppressive therapy when a
beneficiary receives an organ transplant for which immunosuppressive therapy is
appropriate. (Social Security Act, § 1861(s).) Since July 2008, suppliers that furnish an
immunosuppressive drug to a Medicare beneficiary annotate the Medicare claim with the KX
modifier to signify that the supplier retains documentation of the beneficiary’s transplant date and
that such transplant date preceded the date of service for furnishing the drug. (CMS’s Medicare
Claims Processing Manual, Pub. No. 100 04, ch. 17, § 80.3.) (OAS; W-00-13-35707; various reviews;
expected issue date: FY 2014; new start)
 Payments for outpatient drugs and administration of the drugs
Billing and Payments. We will review Medicare outpatient payments to providers for certain drugs
(e.g., chemotherapy drugs) and the administration of the drugs to determine whether Medicare
overpaid providers because of incorrect coding or overbilling of units. Context—Prior OIG reviews
have identified certain drugs, particularly chemotherapy drugs, as vulnerable to incorrect coding.
Providers must bill accurately and completely for services provided. (CMS’s Claims Processing
Manual, Pub. No. 100-04, ch. 1, §§ 70.2.3.1 and 80.3.2.2.) Further, providers must report units of
service as the number of times that a service or procedure was performed. (Chapter 5, § 20.2, and
ch. 26, § 10.4.) (OAS; W-00-12-35576; various reviews; expected issue date: FY 2014; work in
progress)
Prescription Drugs—Quality of Care and Safety
 Covered uses for Medicare Part B drugs (new)
Quality of Care and Safety. We will review the oversight actions CMS and its claims processing
contractors take to ensure that payments for Part B drugs meet the appropriate coverage criteria.
We will also identify challenges contractors face when making coverage decisions for drugs.
Context—If Part B MACs do not have effective oversight mechanisms, Medicare and its beneficiaries
may pay for drugs with little clinical evidence of the drugs’ safety and effectiveness. Medicare Part B
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Medicare Part A and Part B
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generally covers drugs when they are used to treat conditions approved by the Food and Drug
Administration, referred to as “on-label” uses. Part B may also cover drugs when an “off-label” use
of the drug is supported in major drug compendia or when an off-label use is supported by clinical
evidence in authoritative medical literature. (Social Security Act, § 1861(t).) (OEI; 03-13-00450;
expected issue date: FY 2014; work in progress)
 Payment for compounded drugs under Medicare Part B (new)
Quality of Care and Safety. We will examine MACs’ policies and procedures for reviewing and
processing Part B claims for compounded drugs and assess the appropriateness of such claims.
Context—Pharmacy compounding is a practice in which pharmacists combine, mix, or alter
ingredients to create unique medications that meet specific needs of individual patients.
Compounded drugs may be eligible for coverage under Medicare Part B. However, for Medicare to
pay for these drugs, they must be produced in accordance with the Federal Food, Drug, and
Cosmetic Act. (Social Security Act, § 1862(a)(1)(A) and CMS’s Benefits Policy Manual,
ch. 15, Sec. 50.4.7.) CMS notifies the MACs when FDA has determined that compounded drugs are
being produced in violation of the Act. (OEI; 03-13-00270; expected issue date: FY 2014; work in
progress)
 Ethics—Conflicts of interest involving prescription drug compendia
Quality of Care and Safety. We will determine the extent to which publishers of authoritative
prescription drug compendia recognized by CMS have publicly transparent processes for evaluating
anticancer drug therapies and identifying conflicts of interest related to the therapies included in the
compendia. We will also determine the extent to which the publishers have processes for evaluating
non-anticancer drug therapies and for identifying related conflicts and determine whether CMS
ensures that the publishers identify and address conflicts. Context—Generally, Medicare covers
drugs that are approved by FDA and supported by one or more drug compendia recognized by CMS.
(CMS’s Medicare Benefits Policy Manual, Pub. No. 100-02, ch. 1, § 30, and ch. 15, § 50.) Recent
concerns have highlighted the issue of conflicts of interest involving the drug compendia; however,
CMS does not generally require the compendia to publish conflict information, and it is unclear
whether CMS conducts any oversight of the strength of the compendia’s policies or the nature of
their conflicts. Since 2010, publishers must have publicly transparent processes for evaluating
anticancer drug therapies and for identifying potential conflicts related to inclusion of those
therapies in the compendia (Social Security Act, § 1861); there are no such requirements for nonanticancer drugs. (OEI; 07-13-00220; expected issue date: FY 2014; work in progress)
Part A and Part B Contractors
Acronyms and Abbreviations for Selected Terms:
FAR—Federal Acquisition Regulation
LCD—local coverage determination
MAC—Medicare Administrative Contractor
ZPIC—Zone Program Integrity Contractor
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
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Oversight of Contracts
 Contract management at the Centers for Medicare & Medicaid Services
Oversight of Contracts. We will determine how CMS manages and maintains contracts. We will
determine the number and types of contracts active at CMS, the way in which CMS manages these
contracts, the extent to which CMS performed all required contract closeouts, and the way in which
CMS ensures that all required closeouts are completed. We will also determine how CMS ensures
that contract file documentation is maintained as required by regulation. Context—CMS relies
extensively on contractors to help it carry out its basic mission, including administration,
management, and oversight of its health programs. In fiscal year 2012, CMS obligated $4.8 billion
under contracts for a variety of goods and services. Previous Government Accountability Office
(GAO) reports highlighted the vulnerabilities and weaknesses within the contracting environment at
CMS, including problems with the contract closeout process. Given the number of contracts and the
obligated dollars, oversight and monitoring are vital for ensuring effective programs and
safeguarding taxpayer dollars. In addition, timely and effective contract closeouts protect the
Government's financial interests and allow for recovery of excess funds. (OEI; 03-12-00680; 00-000000; various expected issue date: FY 2014; work in progress)
 Administrative costs claimed by Medicare contractors
Oversight of Contracts. We will review administrative costs claimed by various contractors for their
Medicare activities, focusing on costs claimed by terminated contractors. We will also determine
whether the costs claimed were reasonable, allocable, and allowable. Context—We will coordinate
with CMS regarding the selection of the contractors we will review. Criteria include Appendix B of
the Medicare contract with CMS and the Federal Acquisition Regulation (FAR) at 48 CFR Part 31.
(OAS; W-00-10-35005; W-00-11-35005; W-00-12-35005; W-00-13-35005; various reviews; expected
issue date: FY 2014; work in progress)
 Executive compensation benchmark (new)
Oversight of Contracts. We will review contractor employee salaries charged to Medicare to
determine whether the selected contractors applied a required senior executive compensation
benchmark required by regulation and determine the potential cost savings if contractors were
required to apply the same benchmark to all employee compensation. (48 CFR § 31.205-6(p).)
We will determine the potential effect of expanding the executive compensation benchmark to all
employees. Context—The term "senior executive" is defined as the top five compensated
employees of each organizational segment. (48 CFR § 31.205-6(p)(2)(B)(ii).) Several articles have
been written addressing the exorbitant salaries for contractors. (OAS; W-00-13-35710; various
reviews; expected issue date: FY 2015; work in progress)
 Contractor pension cost requirements
Oversight of Contracts. We will determine whether Medicare contractors have calculated and
claimed reimbursement for Medicare’s share of various employee pension costs in accordance with
their Medicare contracts and applicable Federal requirements. We will determine whether
contractors have fully implemented contract clauses requiring them to determine and separately
account for the employee pension assets and liabilities allocable to their contracts with Medicare.
We will also review Medicare carriers and fiscal intermediaries whose Medicare contracts have been
terminated, assess Medicare’s share of future pension costs, and determine the amount of excess
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
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pension assets as of the closing dates. Context—Applicable requirements are found in the FAR at 48
CFR Subpart 31.2; Cost Accounting Standards (CAS) 412 and 413; and the Medicare contract,
Appendix B, § XVI. (OAS; W-00-12-35067; W-00-13-35067; W-00-13-35094; W-00-13-35148; various
reviews; expected issue date: FY 2014; work in progress)
 Contractor postretirement benefits and supplemental employee retirement
plan costs
Oversight of Contracts. We will review the postretirement health benefit costs and the
supplemental employee retirement plans of Medicare fiscal intermediaries and carriers to determine
the allowability, allocability, and reasonableness of the benefits and plans, as well as the costs
charged to Medicare contracts. Context—Criteria are in the FAR at 48 CFR §§ 31.201 through
31.205. (OAS; W-00-12-35095; various reviews; expected issue date: FY 2014; work in progress)
Contractor Functions and Performance
 Medicare administrative contractors—Use and evaluation of local edits
Contractor Functions and Performance. We will determine the extent to which MACs used and
evaluated their local claims processing system edits in 2011. We will also describe how the change
in MAC error rates from 2010 to 2011 compared to MACs’ use and evaluation of local edits in 2011.
Context—Local claims processing edits are a key safeguard for identifying improper payments before
Medicare payment is made and for ensuring that Part A and Part B claims are paid correctly. MACs
are responsible for developing, inputting, and turning on local edits within their jurisdictions, as well
as evaluating the effectiveness of medical review edits. (OEI; 04-12-00140; expected issue date:
FY 2015; work in progress)
 Medicare benefit integrity contractors' activities (new)
Contractor Functions and Performance. We will review and report the level of benefit integrity
activity performed by Medicare benefit integrity contractors in calendar years 2012 and 2013.
Context—The Centers for Medicare & Medicaid Services (CMS) contracts with entities to carry out
benefit integrity activities to safeguard the Medicare program against fraud, waste, and abuse.
Activities that these contractors perform include analyzing data to identify aberrant billing patterns,
conducting fraud investigations, responding to requests for information from law enforcement, and
referring suspected cases of fraud to law enforcement for prosecution. Program Safeguard
Contractors (PSCs) and Zone Program Integrity Contractors (ZPICs) carry out benefit integrity
activities for Medicare Parts A and B, and a Medicare Drug Integrity Contractor (MEDIC) carries out
benefit integrity activities for Medicare Parts C and D. (OEI-03-13-00620 ; expected issue date:
FY 2015; work in progress )
 ZPICs and PSCs—Identification and collection status of Medicare overpayments
(new)
Contractor Functions and Performance. We will determine the total amount of overpayments that
ZPICs and PSCs identified and referred to claims processors in 2013 and the amount of these
overpayments that claims processors collected. We will also review the procedures for tracking
collections on overpayments identified by ZPICs and PSCs. Context— OIG has issued several reports
regarding the tracking and collection of the overpayments that Medicare’s contractors have made to
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Medicare Part A and Part B
Page 26
providers. In response, CMS has added reporting requirements that would improve overpayment
tracking among the claims processors and ZPICs and PSCs. ZPICs and PSCs are required to detect and
deter fraud and abuse in Medicare Part A and/or Part B in their jurisdictions. They conduct
investigations; refer cases to law enforcement; and take administrative actions, such as referring
overpayments to claims processors for collection and return to the Medicare program.
(OEI; 03-13-00630; expected issue date: FY 2014; work in progress)
Information Technology Security, Protected
Health Information, and Data Accuracy
 Medicare contractor information systems security programs—Annual report to
congress
Information Technology Security. We will review independent evaluations of information systems
security programs of Medicare fiscal intermediaries, carriers, and MACs. We will report to Congress
on our assessment of the scope and sufficiency of the independent evaluations and summarize their
results. Context—Federal law requires independent evaluations of the security programs of fiscal
intermediaries, carriers, and MACs and requires OIG to assess such evaluations and report the
results of its assessments to Congress. (Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), § 912.) (OAS; W-00-14-41010; expected issue date: FY 2014;
new start)
 Security of portable devices containing personal health information
Protected Health Information. We will review security controls implemented by Medicare and
Medicaid contractors and at hospitals to prevent the loss of protected health information (PHI)
stored on portable devices and media, such as laptops, jump drives, backup tapes, and equipment
considered for disposal. Context—Recent breaches related to Federal computers, including one
involving a CMS contractor, have heightened concerns about protecting sensitive information. We
will assess and test contractors’ and hospitals’ policies and procedures for electronic health
information protections, access, storage, and transport. OMB recommended that all Federal
departments and agencies take action to protect sensitive information by following the National
Institute of Standards and Technology’s Special Publications 800-53 and 800-53A. (OMB
Memorandum M-06-16, issued June 23, 2006.) (OAS; W-00-13-41014; various reviews; expected
issue date: FY 2014; work in progress)
 Controls over networked medical devices at hospitals (new)
Protected Health Information. We will determine whether hospitals’ security controls over
networked medical devices are sufficient to effectively protect associated electronically protected
health information (ePHI) and ensure beneficiary safety. Context—Computerized medical devices,
such as dialysis machines, radiology systems, and medication dispensing systems that are integrated
with EMRs and the larger health network, pose a growing threat to the security and privacy of
personal health information. Such medical devices use hardware, software, and networks to
monitor a patient’s medical status and transmit and receive related data using wired or wireless
communications. To participate in the Medicare program, providers such as hospitals are required to
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 27
secure medical records and patient information, including ePHI. (42 CFR § 482.24(b).) Medical
device manufacturers provide Manufacturer Disclosure Statement for Medical Device Security
(MDS2) forms to assist health care providers in assessing the vulnerability and risks associated with
ePHI that is transmitted or maintained by a medical device. (OAS; W-00-14-42020; various reviews;
expected issue date: FY 2014; new start)
 Accuracy of the Physician Compare Web site (new)
Data Accuracy. We will review CMS’s efforts to ensure that the Physician Compare Web site contains
accurate information on health care providers. Context—CMS was required by law to create the
Physician Compare Web site, which is intended to help Medicare beneficiaries make informed
choices about their health care by providing them with information about health care
providers. (Affordable Care Act, § 10331.) CMS repurposed its Provider Enrollment, Chain, and
Ownership System (PECOS) as its data source for provider information on Physician
Compare. However, prior OIG work found that the provider information in PECOS was often
inaccurate and, at times, incomplete. (OEI; 01-14-00210; expected issue date: FY 2015, new start;
Affordable Care Act)
Other Part A and Part B Program Management Issues
Acronyms and Abbreviations for Selected Terms:
NPI—national provider identifier
PSC—Program Safeguard Contractor
Beneficiary Eligibility
 Payments for incarcerated beneficiaries
Beneficiary Eligibility. We will review Medicare payments for incarcerated beneficiaries to determine
whether the payments were made for beneficiaries who did not meet the criteria for exception
identified in Medicare regulations. Context— Prior OIG reviews have identified improper Medicare
payments for incarcerated beneficiaries. Medicare, in general, does not pay for services rendered to
incarcerated beneficiaries; however, the regulation does permit Medicare payment where an
incarcerated beneficiary has an obligation for the cost of care. (Social Security Act, § 1862, and
42 CFR § 411.4.) CMS provides instructions for providers who render services to incarcerated
beneficiaries who meet the criteria for exception. (CMS’s Medicare Claims Processing Manual, ch 1,
§ 10.4.) (OAS; W-00-13-35624; W-00-14-35624; expected issue date: FY 2014; work in progress)
Provider Eligibility
 Enhanced enrollment screening process for Medicare providers
Provider Eligibility. We will determine the extent to which and the way in which CMS and its
contractors have implemented enhanced screening procedures for Medicare providers pursuant to
the Affordable Care Act, § 6401. We will also collect data on and report the number of initial
enrollments and enrollment revalidations approved and denied by CMS before and after the
implementation of the enhanced screening procedures. Context—As part of an effort to prevent
fraud, waste, and abuse resulting from vulnerabilities in the Medicare enrollment process, CMS is
HHS OIG Work Plan | FY 2014
Medicare Part A and Part B
Page 28
implementing new authorities that include a site visit process, an automated provider screening
process, fingerprinting, and background checks. (OEI; 03-13-00050; expected issue date: FY 2014;
work in progress. Affordable Care Act.)
 Idle Medicare provider records (new)
Provider Eligibility. We will identify active Medicare providers who have not billed Medicare for
more than 1 year. Context—Previous OIG work suggested that many providers have active Medicare
records but have not submitted any claims for more than 1 year. Federal regulations permit CMS to
deactivate the billing privileges of Medicare providers who do not submit any claims for 12
consecutive months. Deactivation helps deter fraudulent use of inactive records. Providers enrolled
in Medicare solely to refer items and services for beneficiaries (ordering and referring providers) and
certain provider specialty types are excluded from this deactivation process. (OEI; 07-13-00590;
expected issue date: FY 2014; work in progress)
 Payments to providers subject to debt collection
Provider Eligibility. We will review providers and suppliers that received Medicare payments after
CMS referred them to the Department of the Treasury (Treasury) for failure to refund overpayments.
We will determine the extent to which they ceased billing under one Medicare provider number but
billed Medicare under a different number after being referred to Treasury. Context—CMS may deny
a provider’s or supplier’s enrollment in the Medicare program if the current owner, physician, or
nonphysician practitioner has an existing overpayment at the time of filing an enrollment
application. Federal law requires CMS to seek the recovery of all identified overpayments. The Debt
Collection Improvement Act of 1996 (DCIA) requires Federal agencies to refer eligible delinquent
debt to Treasury for appropriate action. (42 CFR § 424.530(a)(6).) (OAS; W-00-12-35622; various
reviews; expected issue date: FY 2014; work in progress)
Medicare as Secondary Payer
 Improper Medicare payments for beneficiaries with other insurance coverage
Medicare as Secondary Payer. We will identify Medicare payments made for services to
beneficiaries who have certain types of other insurance coverage to assess the effectiveness of
Medicare’s controls to prevent such payments. We will determine whether selected non-Medicare
health plans properly reported insurance coverage information to Medicare as required.
Context—The provisions underlying the objectives are in the Social Security Act, § 1862(b), and the
Medicare, Medicaid and SCHIP Extension Act of 2007, §111. (OAS; W-00-14-35317; various reviews;
expected issue date: FY 2014; work in progress)
HHS OIG Work Plan | FY 2014
Medicare Part C and Part D
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Medicare Part C and Part D
Beneficiaries must be enrolled in both Part A and Part B to join one of the Part C Medicare Advantage
(MA) plans, which are administered by MA organizations. MA organizations are public or private
organizations licensed by States as risk-bearing entities that are under contract with the Centers for
Medicare & Medicaid Services (CMS) to provide covered services. MA organizations may offer one or
more plans. Medicare’s optional outpatient prescription drug benefit, known as Medicare Part D, took
effect on January 1, 2006. (Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA).) Part D is a voluntary benefit available to Medicare beneficiaries.
Acronyms and Abbreviations for Selected Terms:
MA—Medicare Advantage
PDE—prescription drug event
Part C – Medicare Advantage
Medicare Advantage (MA) plans provide all Part A and Part B services and generally provide additional
services not covered by traditional Medicare. Beneficiaries usually pay monthly premiums and
copayments that are often less than the coinsurance and deductibles under the original Medicare Part A
and Part B. In most cases, these plans also offer Part D prescription drug coverage. Costs and benefits
vary by plan.
MA Organization’s Compliance With Part C Requirements
 Encounter data—CMS oversight of data integrity
Compliance With Requirements. We will review the extent to which MA encounter data reflecting
the items and services provided to MA plan enrollees are complete and consistent and are verified
for accuracy by CMS. Context—Prior CMS and OIG audits indicated vulnerabilities in the accuracy of
risk adjustment data reporting by MA organizations. In 2012, MA encounter data reporting
requirements expanded from an abbreviated set of primary diagnosis data to a more comprehensive
set of data. (CMS's One Time Notification, Pub. 100-20, CR 7562.) (OEI; 00-00-00000; expected issue
date: FY 2014, new start)
 Risk adjustment data—Sufficiency of documentation supporting diagnoses
Compliance With Requirements. We will review the medical record documentation to ensure that it
supports the diagnoses MA organizations submitted to CMS for use in CMS’s risk-score calculations
and determine whether the diagnoses submitted complied with Federal requirements.
Context—Prior OIG reviews have shown that medical record documentation does not always support
the diagnoses submitted to CMS by the MA organizations. MA organizations are required to submit
risk adjustment data to CMS in accordance with CMS instructions. (42 CFR § 422.310(b).) Payments
to MA organizations are adjusted on the basis of the health status of each beneficiary, so inaccurate
diagnoses may cause CMS to pay MA organizations improper amounts. (Social Security Act,
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Medicare Part C and Part D
Page 30
§§ 1853(a)(1)(C) and (a)(3).) (OAS;W-00-14-35078; various reviews; expected issue date: FY 2014;
new start)
Part D – Prescription Drug Program
The administration of Part D depends upon extensive coordination and information sharing among
Federal and State Government agencies, drug plan sponsors, contractors, health care providers, and
third-party payers. CMS and drug plan sponsors share responsibility for protecting the Part D program
from fraud, waste, and abuse. Payments to drug plan sponsors made on the basis of bids, risk
adjustments, and reconciliations add to the complexities and challenges of the benefit.
Medicare, Sponsor, and Manufacturer Policies and Practices
 Savings potential of adjusting risk corridors
Policies and Practices. We will analyze risk-sharing payments between Medicare and Part D sponsors
to determine whether cost savings could have been realized had the existing risk corridor thresholds
remained at 2006 and 2007 levels. Context—CMS has the authority to retain existing risk corridor
thresholds or widen them for plan year 2012 and beyond. Risk corridors determine the amount of
unexpected profits or losses that Medicare and sponsors share. (Social Security Act § 1860D-15.)
(OEI; 00-00-00000; expected issue date: FY 2015; new start)
 Savings potential of retail pharmacy discount generic drug programs
Policies and Practices. We will determine whether Part D sponsors receive the discount drug prices
available to the general public at certain retail pharmacies. We will determine the number and
percentage of Part D claims for which the amounts paid were equal to the discount prices.
Context—Several retail chain pharmacies offer certain generic drugs at discounted prices (e.g., $4 for
a 30-day supply). However, some of the pharmacies have restrictions in their discount generic
programs that prevent Part D from sharing in the discounted prices. Part D prescription drug plan
sponsors may include “usual and customary” price provisions in their contracts with pharmacies,
which generally require that the sponsor pay the lesser of the pharmacy’s negotiated price or the
discount price for the drugs. (OEI; 03-11-00460; expected issue date: FY 2014; work in progress)
 Comparison of Medicare Part D and Medicaid pharmacy reimbursement
and rebates (new)
Policies and Practices. This review, which is a followup to previous work, will compare pharmacy
reimbursement and rebate amounts for a sample of brand-name drugs paid by Medicare Part D and
by Medicaid. Context— Spending on drugs is partially recouped through manufacturers' rebates. A
previous OIG review revealed that Part D sponsors and State Medicaid agencies paid pharmacies
roughly the same amounts for brand-name drugs. However, statutorily defined Medicaid unit rebate
amounts for brand-name drugs exceeded Part D unit rebate amounts by a substantial margin,
resulting in lower drug program costs for Medicaid. (OEI; 03-13-00650; expected issue date: FY
2014; Work in Progress;)
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Medicare Part C and Part D
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 Program integrity—Manufacturer safeguards to prevent the use of copayment
coupons for drugs paid for by Part D
Policies and Practices. We will identify the safeguards that pharmaceutical manufacturers have in
place to ensure that beneficiaries do not use copayment coupons to obtain prescription drugs paid
for by Medicare Part D. Context—Copayment coupons may create an incentive for beneficiaries to
choose more expensive brand-name drugs over lower-cost generic drugs. A recent survey suggests
that beneficiaries are using copay coupons to obtain specific brand-name prescription drugs, causing
Medicare to pay more than necessary when less costly versions of the same drugs are available. The
use of copayment coupons in Federal health care programs implicates the anti-kickback statute.
(OEI; 05-12-00540; expected issue date: FY 2014; work in progress)
Sponsor Compliance With Part D Requirements
 Documentation of administrative costs in sponsors’ bid proposals
Compliance With Requirements. We will review the sufficiency of Part D sponsors’ documentation
supporting the administrative costs they included in their annual bid proposals to CMS.
Context—Part D sponsors submit bids for the costs of providing prescription drug coverage, including
administrative costs. (Social Security Act, § 1860D-11(b) and 42 CFR § 423.265(c)(1).) Medicare’s
subsidy payments to Part D plans and beneficiary premiums are calculated on the basis of the
sponsors’ bids . (OAS; W-00-14-35506; various reviews; expected issue date: FY 2015; new start)
 Reconciliation of payments—Sponsor reporting of direct and indirect
remuneration
Compliance With Requirements. We will determine whether Part D sponsors complied with
Medicare requirements for reporting direct and indirect remunerations (DIR). Context—Medicare
calculates certain payments to sponsors on the basis of amounts actually paid by the Part D
sponsors, net of DIR. (42 CFR pt. 423, subpart G.) DIR includes all rebates, subsidies, and other price
concessions from sources (including, but not limited to, manufacturers and pharmacies) that serve
to decrease the costs incurred by Part D sponsors for Part D drugs. CMS requires that Part D
sponsors submit DIR reports for use in the payment reconciliation process. (OAS; W-00-13-35508;
W-00-14-35508; various reviews; expected issue date: FY 2014; work in progress)
 Reconciliation of payments—Reopening final payment determinations
Compliance With Requirements. We will review CMS’s policies, procedures, instructions, and
processes for reopening final payment determinations and determine the adequacy of sponsor
compliance and sponsor-submitted data. Context—CMS may reopen and revise an initial or
reconsidered final payment determination within time limitations that apply depending on the
reason for reopening. (42 CFR § 423.346(a).) In April 2013, CMS announced that it planned to
reopen 2007 and 2008 reconciliations during the 2013 calendar year and would assess at a later time
whether it is necessary to reopen 2009, 2010, and 2011 reconciliations. CMS allowed sponsors to
request reopening and to submit additional prescription drug event (PDE) data and DIR data. (OAS;
W-00-14-35621; various reviews; expected issue date: FY 2014; new start)
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Medicare Part C and Part D
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 Ensuring dual eligibles’ access to drugs under Part D
Compliance With Requirements. We will review the extent to which drug formularies developed by
Part D sponsors include drugs commonly used by dual-eligible beneficiaries as required.
Context—Dual-eligible beneficiaries are enrolled in Medicaid but qualify for prescription drug
coverage under Medicare Part D. As long as Part D plans meet certain limitations outlined in 42 CFR
§ 423.120, they have discretion to include different Part D drugs and drug utilization tools in their
formularies. The Affordable Care Act, § 3313, requires OIG to conduct this review annually.
(OEI; 05-14-00170; expected issue date: FY 2014; work in progress; Affordable Care Act)
Part D Billing and Payments
 Documentation of pharmacies’ prescription drug event data (new)
Billing and Payments. We will conduct additional reviews of selected retail pharmacies identified in
a prior OIG report as having questionable Part D Billing. We will determine whether Medicare Part D
PDE records submitted by the selected pharmacies were adequately supported and complied with
applicable Federal requirements. Context—Drug plan sponsors must submit the information
necessary for the Secretary to determine payments to the plans. (Social Security Act, § 1860D15(f)(1).) (OAS; W-00-13-35411; various reviews; expected issue date: FY 2014; work in progress)
 Duplicated and/or unsupported claims
Billing and Payments. We will review Medicare Part D claims to determine whether they were
duplicated in Part A or Part B. We will also determine the extent to which payments for the sampled
Part D claims were correct and were supported. Context—A drug prescribed for a Part D beneficiary
will not be considered for payment if the drug was prescribed and dispensed or administered under
Part A or Part B. (Social Security Act, § 1860D-2(e)(2)(B).) Medicare Part A covers drugs for
beneficiaries who are receiving treatment as hospital inpatients. Medicare Part A and Part B do not
cover most of the outpatient prescription drugs that may be covered under Part D. Drugs covered
under Part B include injectable drugs administered by a physician, drugs used in conjunction with
medical equipment, and some vaccines. (OAS; W-00-14-35409; various reviews; expected issue
date: FY 2014; work in progress)
 Questionable utilization patterns for HIV drugs
Billing and Payments. We will describe human immunodeficiency virus (HIV) drugs covered under
Medicare Part D and determine the extent to which beneficiaries had questionable utilization
patterns. We will describe the characteristics of beneficiaries associated with questionable
utilization patterns and the associated pharmacies and prescribers. Part D covers drugs that are
prescribed and used for medically accepted indications. (OEI; 02-11-00170; expected issue date:
FY 2014; work in progress)
 Quality of sponsor data used in calculating coverage-gap discounts
Billing and Payments. We will review data submitted by Part D sponsors for use in calculating the
coverage gap discount to assess the accuracy of the data and determine whether beneficiary
payments are correct and amounts paid to sponsors are supported. Context—The Affordable Care
Act required the Secretary to establish a Medicare coverage gap discount program to provide relief
to beneficiaries who are responsible for paying all drug costs during their coverage gaps. (Social
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Medicare Part C and Part D
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Security Act, § 1860D-14A, as amended by the Affordable Care Act, § 3301.) Sponsors track
beneficiary payment information and the drug cost data necessary to calculate eligibility for the
program. (OAS; W-00-14-35611; various reviews; expected issue date: FY 2015; new start;
Affordable Care Act)
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Medicaid Program
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Medicaid Program
The Federal Government and States jointly fund Medicaid, a program that provides medical assistance to
certain low-income individuals. The Federal share of a State’s expenditures is called the Federal medical
assistance percentage (FMAP). States have considerable flexibility in structuring their Medicaid
programs within broad Federal guidelines governing eligibility, provider payment levels, and benefits. As
a result, Medicaid programs vary widely from State to State.
Our continuing and new reviews of Medicaid in fiscal year (FY) 2013 address prescription drugs,
long-term and community care, other services, program integrity and accountability, administration,
information systems, and managed care. Many States contract with managed care organizations (MCOs)
to provide or coordinate comprehensive health services.
Medicaid Prescription Drug Reviews
Acronyms and Abbreviations for Selected Terms Used in This Section:
AMP—average manufacturer price
DRA - Deficit Reduction Act of 2005
State and Manufacturer Compliance With Medicaid Requirements
 States' use of Medicaid drug utilization review to reduce the inappropriate
dispensing of opioids
Compliance With Requirements. We will review the education and enforcement actions States have
taken on the basis of information generated by their drug utilization review (DUR) programs related
to inappropriate dispensing and potential abuse of prescription opiates. Context—States are
required to establish DUR programs to receive the Federal share of Medicaid payments. (42 CFR
§ 456.703.) DUR involves, among other functions, ongoing and periodic examination of claims data
to identify patterns of fraud, abuse, gross overuse, or medically unnecessary care and implementing
corrective action when needed. (OEI; 05-13-00550; expected issue date: FY 2014; work in progress)
 States’ methods for resolving rebate disputes with manufacturers
Compliance With Requirements—We will review the causes of and resolutions to Medicaid rebate
disputes with manufacturers and the methods States use to resolve them. Context—Previous OIG
reports have found large amounts in uncollected rebates. In 2008, Medicaid spent about $24 billion
on prescription drugs and received about $8 billion in rebates. Federal law requires drug
manufacturers to enter into drug rebate agreements as a prerequisite to coverage of their drugs
under Medicaid State plans. (Social Security Act, § 1927(a).) (OEI; 05-11-00580; expected issue
date: FY 2014; work in progress)
 Manufacturer compliance with AMP reporting requirements
Compliance With Requirements. We will review manufacturer compliance with AMP reporting
requirements and determine what percentage of manufacturers complied with the requirements.
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We will also determine whether stepped-up enforcement actions by CMS and OIG are reflected in
increased compliance by manufacturers. Context—A previous OIG review found that in 2008, more
than half of the drug manufacturers that were required to submit quarterly AMPs to CMS failed to
comply with reporting requirements in at least one quarter. Manufacturers were even less likely to
comply with monthly AMP reporting requirements. Rebate amounts are determined on the basis of
AMPs. Price-reporting obligations for certain drug manufacturers, including the obligation to report
AMP data to CMS quarterly and monthly, are set forth in the Social Security Act, § 1927(b)(3), and 42
CFR §§ 447.510(a) and (d). (OEI; 03-14-00150; expected issue date: FY 2015; work in progress)
 States’ collection and reporting of rebates
Compliance With Requirements. We will determine whether the increased amount of manufacturer
rebates for brand-name and generic drugs were collected by States and reported to the Federal
government, as required.. We will also determine the amount of supplemental drug rebates that
States collected during a selected period. Context—The Affordable Care Act, § 2501, increased the
basic Federal minimum rebate amount that helps States and the Federal Government lower the
costs of Medicaid prescription drug programs. To further reduce such costs, States negotiate
supplemental rebate agreements (SRAs) with drug manufacturers that agree to pay amounts in
addition to their basic Federal rebates. We previously estimated that between 2006 and 2011, SRAs
saved Medicaid an additional $1 billion per year, on average. (OEI; 03-12-00520; expected issue
date: FY 2014; work in progress; Affordable Care Act)
 Rebates for new formulations of existing drugs
Compliance With Requirements. We will review drug manufacturers’ compliance with Medicaid
drug rebate requirements for drugs that are new formulations of existing drugs. We will also
determine whether manufacturers have correctly identified all of their drugs that are subject to a
recent change in law. Context—The Affordable Care Act increased the additional rebate for drugs
that are new formulations of existing drugs if certain conditions are met. (Social Security Act,
§ 1927(c)(2)(C), as amended by the Affordable Care Act, § 2501.) (OAS; W-00-14-31451; various
reviews; expected issue date: FY 2015; new start; Affordable Care Act)
 States collection of rebates on physician-administered drugs
Comliance With Requirements. We will determine whether States have established adequate
accountability and internal controls for collecting Medicaid rebates on physician-administered drugs.
We will assess States’ processes for collecting national drug code information on claims for
physician-administered drugs and subsequent processes for billing and collecting rebates.
Context—Prior OIG work identified concerns with States’ collection and submission of data to CMS,
including national drug codes that identify drug manufacturers, thus allowing States to invoice the
manufacturers responsible for paying rebates. (Deficit Reduction Act of 2005 (DRA).) To be eligible
for Federal matching funds, States are required to collect rebates on covered outpatient drugs
administered by physicians. (Social Security Act, § 1927(a).) (OAS; W-00-12-31400; W-00-13-31400;
W-00-14-31400; various reviews; expected issue date: FY 2014; work in progress)
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Medicaid Program
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State Claims for Federal Reimbursement
 Medicaid payments for multiuse vials of Herceptin (new)
State Claims—We will review States’ claims for the Federal share of Medicaid payments for the drug
Herceptin, which is used to treat breast cancer, to determine whether providers properly billed the
States for the drug. We will determine whether providers’ claims to States were complete and
accurate and were billed in accordance with the regulations of the selected States. Context—Prior
OIG audits of Herceptin have shown provider noncompliance with Medicare billing requirements.
Similar issues may occur in Medicaid. (OAS; W-00-14-31476; various reviews; expected issue date:
FY 2014; new start)
Quality of Care and Safety of Beneficiaries
 Atypical antipsychotic drugs prescribed for children in Medicaid
Quality of Care and Safety. We will determine the extent to which Medicaid claims for atypical
antipsychotic drugs were for treatment of children aged 18 years and younger. We will determine,
on the basis of medical record reviews, the extent to which the atypical antipsychotic drug claims
were for uses and indications not listed in one or more of the approved drug compendia. We will
also determine the extent to which the medical reviews identified concerns about the treatment of
the children with the prescribed drugs related to dosage, duration of treatment, indications for use,
monitoring, side effects, reactions to combinations of drugs (polypharmacy), and patient age.
Context—State Medicaid programs must pay for covered outpatient drugs for medically accepted
indications (i.e., those approved for the drug by the Food and Drug Administration (FDA) and/or uses
supported by one or more approved compendia). States may choose to also pay for covered
outpatient drugs for indications not listed in approved compendia. (OEI; 07-12-00320; expected
issue date: FY 2014; work in progress)
Home Health Services and
Other Community–Based Care
Acronyms and Abbreviations for Selected Terms Used in This Section:
CDT—continuing day treatment
FFP—Federal financial participation
HCBS—home and community-based services
HHA—home health agency
PCS—personal care services
Billing and Payments
 Home health services—provider and beneficiary eligibility
Billing and Payments. We will review HHA claims to State Medicaid programs to determine whether
the billing providers met applicable criteria to provide home health services to Medicaid
beneficiaries. We will also determine whether the beneficiaries met the criteria to receive such
services. Context—Medicaid home health services providers must meet standards and conditions of
participation, many of which relate to quality of care and safety of beneficiaries, such as a minimum
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Medicaid Program
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number of professional staff, proper licensing and certification, review of service plans of care, and
proper authorization and documentation of provided services. Services are provided to a beneficiary
at the beneficiary's place of residence and on a physician's orders as part of a written care plan that
the physician reviews every 60 days. The care must include intermittent (not full-time) skilled
nursing care and may include physical therapy or speech-language pathology services. The related
Federal standards and conditions for HHAs’ participation in Medicaid are at 42 CFR § 440.70 and
42 CFR Part 484. (OAS; W-00-12-31304; various reviews; expected issue date: FY 2015; work in
progress)
 Adult day health care services
Billing and Payments. We will review Medicaid payments by States for adult day care services to
determine whether the providers complied with Federal and State requirements. Context—Adult
day health care programs provide health, therapeutic, and social services and activities to program
enrollees. Beneficiaries enrolled must meet eligibility requirements, and services must be furnished
in accordance with a plan of care. Medicaid allows payments for adult day health care
through various authorities, including home and community-based services (HCBS) waivers. (Social
Security Act, § 1915, and 42 CFR § 440.180.) (OAS; W-00-12-31386; W-00-13-31386; various
reviews; expected issue date: FY 2014; work in progress)
 Continuing day treatment mental health services
Billing and Payments. We will review Medicaid payments to continuing day treatment (CDT) mental
health services providers to determine whether their claims were adequately supported. Our review
will follow up on a State Commission’s findings of unsubstantiated claims. Context—CDT providers
render an array of services to people with mental illnesses. CDT providers bill Medicaid on the basis
of the number of service hours rendered to beneficiaries. One State’s regulations require that a
billing for a visit/service hour be supported by documentation indicating the nature and extent of
services provided. A State commission found that more than 50 percent of the service hours billed
by CDT providers in that State could not be substantiated. To be allowable, costs must be
authorized, or not prohibited, under State or local laws or regulations. (Office of Management and
Budget (OMB) Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, Att. A,
§ C.1.c.) (OAS; W-00-12-31128; W-00-13-31128; various reviews; expected issue date: FY 2014;
work in progress)
State Claims for Federal Reimbursement
 Room and board costs associated with HCBS waiver program payments
State Claims—We will determine whether selected States claimed Federal reimbursement for
unallowable room and board costs associated with services provided under HCBS waiver programs.
We will determine whether HCBS payments included the costs of room and board and identify the
methods the States used to determine the amounts paid. Context—Medicaid covers the cost of
HCBS provided under a written plan of care to individuals in need of such services but does not allow
for payment of room and board costs. (42 CFR §§ 441.301(b) and 441.310(a).) HCBS are provided
pursuant to the Social Security Act, § 1915(c). States may use various methods to pay for such
services, such as a settlement process based on annual cost reports or prospective rates with rate
adjustments based on cost report data and cost-trending factors. (OAS; W-00-13-31465; various
reviews; expected issue date: FY 2014; work in progress)
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Medicaid Program
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Quality of Care and Safety of Beneficiaries
 Home health services—Screenings of health care workers
Quality of Care and Safety—We will review health-screening records of Medicaid home health
agency (HHA) health care workers to determine whether they were screened in accordance with
Federal and State requirements. Context—Health screenings for home health care workers include
vaccinations such as those for hepatitis and influenza. HHAs provide health care services to
Medicaid beneficiaries while the home health care workers are visiting beneficiaries’ homes. HHAs
must operate and provide services in compliance with all applicable Federal, State, and local laws
and regulations and with accepted standards that apply to personnel providing services within such
an agency. (Social Security Act, §1891(a)(5).) The Federal requirements for home health services are
found at 42 CFR §§ 440.70, 441.15, and 441.16 and at 42 CFR Part 484. Other applicable
requirements are found in State and local regulations. (OAS; W-00-11-31387; W-00-12-31387;
various reviews; expected issue date: FY 2014; work in progress)
Other Medicaid Services, Equipment and Supplies
Acronyms and Abbreviations for Selected Terms Used in This Section:
EPSDT—Early and Periodic Screening, Diagnostic, and
Treatment (services)
FFP—Federal financial participation
OMB—Office of Management and Budget
Policies and Practices
 Medical equipment and supplies—Opportunities to reduce Medicaid payment
rates for selected items
Policies and Practices. We will determine whether opportunities exist for lowering Medicaid
payments for selected items of medical equipment and supplies. We will also determine the amount
of Medicaid savings that could be achieved for selected items through rebates, competitive bidding,
or other means. Context—Prior work found that State Medicaid programs negotiated rebates with
manufacturers that reduced net payments for home blood-glucose test strips. Similarly, CMS
reduced Part B rates of payment in selected areas through competitive bidding. (OAS;
W-00-13-31390; various reviews; expected issue date: FY 2014; new start)
Billing and Payments
 Transportation services—Compliance with Federal and State requirements
Billing and Payments. We will review Medicaid payments by States to providers for transportation
services to determine the appropriateness of the payments for such services. Context—Federal
regulations require States to ensure necessary transportation for Medicaid beneficiaries to and from
providers. (42 CFR § 431.53.) Each State may have different Medicaid coverage criteria,
reimbursement rates, rules governing covered services, and beneficiary eligibility for services. (OAS;
W-00-12-31121; W-00-13-31121; various reviews; expected issue date: FY 2015; work in progress)
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 Questionable billing for outpatient mental health services by medicaid
providers
Billing and Payments. We will review State payments for Medicaid outpatient mental health services
to identify questionable billing patterns. We will also review combined Medicaid and Medicare
claims data to identify additional questionable billing patterns. Context—Medicaid can cover
outpatient mental health services through a variety of benefits authorized by various parts of Title
XIX of the Social Security Act. States are required to ensure that Medicaid payments are consistent
with efficiency, economy, and quality of care standards. (Social Security Act, § 1902(a)(30)(A), and
42 CFR 447.200.) Providers whose claims exhibit questionable patterns may be receiving payments
that are not consistent with those standards. Combining claims data from Medicaid and Medicare
may reveal additional questionable billing patterns that are not evident when data from each
program is examined in isolation. (OEI; 07-13-00320; expected issue date: FY 2014; work in
progress)
 Health-care-acquired conditions—Prohibition on Federal reimbursements
Billing and Payments. We will determine whether selected States made Medicaid payments for
health-care-acquired conditions and provider-preventable conditions and quantify the amount of
Medicaid payments for such conditions. Context—As of July 1, 2011, Federal payments to States,
are prohibited for any amounts expended for providing medical assistance for health-care-acquired
conditions. (Social Security Act, § 1903, and Affordable Care Act, § 2702.) Federal regulations
prohibit Medicaid payments by States for services related to health-care-acquired conditions and for
provider-preventable conditions. (42 CFR § 447.26.) (OAS; W-00-14-31452; various reviews;
expected issue date: FY 2015; new start; Affordable Care Act)
State Claims for Federal Reimbursement
 Dental services for children—Inappropriate billing
State Claims. We will review Medicaid payments by States for dental services to determine whether
States have properly claimed Federal reimbursement. Context—Prior OIG work indicated that some
dental providers may be inappropriately billing for services. Dental services are required for most
Medicaid-eligible individuals under age 21 as a component of the Early and Periodic Screening,
Diagnostic, and Treatment (EPSDT) services benefit. (Social Security Act, §§ 1905(a)(4)(B) and
1905(r).) Federal regulations define “dental services” as diagnostic, preventative, or corrective
procedures provided by or under the supervision of a dentist. (42 CFR § 440.100.) Services include
the treatment of teeth and the associated structure of the oral cavity and disease, injury, or
impairment that may affect the oral cavity or general health of the recipient. (OAS; W-00-11-31135;
W-00-12-31135; various reviews; expected issue date: FY 2014; work in progress)
 Family planning services—Claims for enhanced Federal funding
State Claims. We will review family planning services in several States to determine whether States
improperly claimed enhanced Federal funding for such services and the resulting financial impact
on Medicaid. Context—Previous OIG work found improper claims for enhanced funds for family
planning services. States may claim Federal reimbursement for family planning services at the
enhanced Federal matching rate of 90 percent. (Social Security Act, § 1903(a)(5).) (OAS;
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Medicaid Program
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W-00-11-31078; W-00-12-31078; W-00-13-31078; various reviews; expected issue date: FY 2014;
work in progress)
Quality of Care and Safety of Beneficiaries
 Access to pediatric dental care for children enrolled in Medicaid
Quality of Care and Safety. We will review billing patterns of pediatric dentists and their associated
clinics in selected States and describe the extent to which children enrolled in Medicaid received
services from them. Context—Previous OIG investigations identified numerous vulnerabilities with
pediatric dental care, particularly with the care provided by certain for-profit dental chains. OIG
investigations have also identified significant problems with access to pediatric dental services.
Medicaid covers comprehensive dental care for approximately 30 million low-income children
through the EPSDT benefit. Under EPSDT, States must cover dental services and dental screening
services for children. (OEI; 02-12-00330; 02-14-00120; various reviews; expected issue date:
FY 2014; work in progress)
 Utilization of preventive screening services for children enrolled in Medicaid
(new)
Quality of Care and Safety. We will determine what steps CMS has taken to address OIG’s
recommendations to improve the provision of Medicaid EPSDT services and what obstacles it faces in
implementing these recommendations. We will also determine whether the underutilization of EPSDT
services continues to be a challenge for children enrolled in Medicaid. Context—Previous OIG work
found that, in nine States, three out of four children did not receive all required medical, vision, and
hearing screenings. OIG made several recommendations to CMS to increase participation in EPSDT
screenings and to increase the completeness of medical screenings. (OEI, 05-13-00690; expected issue
date: FY 2014; work in progress)
State Management of Medicaid
Acronyms and Abbreviations for Selected Terms Used in This Section:
CPE—certified pubic expenditures
Form CMS-64—Quarterly Medicaid Statement of Expenditures
MIP—Medicaid Integrity Program
State Mechanisms to Fund Their Medicaid Programs
 State use of provider taxes to generate Federal funding
Funding Mechanisms. We will review State health-care-related taxes imposed on various Medicaid
providers to determine whether the taxes comply with applicable Federal requirements. Our work
will focus on the mechanism States use to raise revenue through provider taxes and determine the
amount of Federal funding generated. Context—Previous OIG work raised concerns about States’
use of health-care-related taxes. Many States finance a portion of their Medicaid spending by
imposing taxes on health care providers. Federal regulations define and set forth the standard for
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permissible health-care-related taxes. (42 CFR §§ 433.55 and 433.68.) (OAS; W-00-13-31455;
various reviews; expected issue date: FY 2014; work in progress)
 State compliance with Federal Certified Public Expenditures regulations
Funding Mechanisms. We will determine whether States are complying with Federal regulations for
claiming Certified Public Expenditures (CPEs), which are normally generated by local governments as
part of their contribution to the coverage of Medicaid services. States may claim CPEs to provide the
States’ shares in claiming Federal reimbursement as long as the CPEs comply with Federal
regulations and are being used for the required purposes. (42 CFR § 433.51 and 45 CFR § 95.13.)
(OAS; W-00-13-31110; various reviews; expected issue date: FY 2014; work in progress)
State Claims for Federal Reimbursement
 State allocation of Medicaid administrative costs
State Claims—We will review administrative costs claimed by several States to determine whether
they were properly allocated and claimed or directly charged to Medicaid. Context—Prior reviews in
a State noted problems with the State’s administrative costs. The Federal share of Medicaid
administrative costs is typically 50 percent, with enhanced rates for specific types of costs. Federal
cost sharing for the proper and efficient administration of Medicaid State plans is provided by the
Social Security Act, § 1903(a)(7). Administrative costs are claimed in accordance with OMB
Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments and State requirements.
(OAS; W-00-10-31123; W-00-11-31123; W-00-13-31123; various reviews; expected issue date:
FY 2014; work in progress)
 State-operated facilities—Reasonableness of payment rates
State Claims—We will determine whether Medicaid payment rates to State-operated facilities are
reasonable and the Federal share is claimed in accordance with Federal and State requirements. We
will determine in selected States the extent to which payments to such providers may be excessive.
Context—Payments for services must be consistent with efficiency, economy, and quality of care.
(Social Security Act, § 1902(a)(30)(A).) Federal regulations state that a cost is reasonable if, in its
nature and amount, it does not exceed that which would be incurred by a prudent person under the
circumstances prevailing at the time the decision was made to incur the cost. (2 CFR § 225,
Appendix A, § C. 2.) (OAS; W-00-12-31398; W-00-13-31398; various reviews; expected issue date:
FY 2014; work in progress)
 State cost allocations that deviate from acceptable practices
State Claims—We will review public assistance cost allocation plans and processes for selected
States to determine whether the States claimed Medicaid costs that were supported and allocated
on the basis of random moment sampling systems (RMSS) that deviated from acceptable statistical
sampling practices. Context—Prior OIG reviews of school-based and community-based
administrative claims found significant unallowable payments when payments were based on RMSS.
Such systems must be documented so as to support the propriety of the costs assigned to Federal
awards. (OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments,
Attachment A, § C.1.j.) A State must claim FFP for costs associated with a program only in
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accordance with its approved cost allocation plan (45 CFR § 95.517(a).) (OAS; W-00-13-31467;
various reviews; expected issue date: FY 2015; work in progress)
 Enhanced Federal Medical Assistance Percentage (new)
State Claims. We will review States’ Medicaid claims to determine whether the States correctly
applied enhanced Federal Medical Assistance Percentage (FMAP) payment provisions of the
Affordable Care Act. Context—The Affordable Care Act, § 2001, authorized the use of an FMAP of
100 percent for individuals who are newly eligible because of Medicaid expansion. In addition, the
Affordable Care Act, § 2012, required that Medicaid payments to primary care providers be at least
that of the Medicare rates in effect for calendar years 2013 and 2014. (OAS; W-00-14-31480;
various reviews; expected issue date: FY 2015; new start; Affordable Care Act)
 Medicaid eligibility enrollment—National error rates
State Claims. We will determine the extent to which States improperly enrolled individuals in
Medicaid programs who did not meet eligibility criteria and estimate national enrollment error rates.
For FY 2014, the national enrollment error rates will be estimated for newly enrolled Medicaid
beneficiaries in States that expanded their Medicaid programs pursuant to the Affordable Care Act
and in States that did not. We will also identify issues that contributed to enrollment
errors. Context—The Affordable Care Act, § 2001, allowed States to expand Medicaid eligibility
coverage to individuals between ages 19 and 64 with incomes up to 133 percent of the Federal
poverty level and made other changes affecting State processes for Medicaid enrollment.
(OEI; 00-00-0000; expected issue date: FY2015; new start; Affordable Care Act).
 Medicaid eligibility determinations in selected States (new)
State Claims. We will review Medicaid eligibility determinations in selected States. For each State
selected, we will calculate a Medicaid eligibility error rate. We will focus on eligibility determinations
for beneficiaries who are newly eligible for Medicaid pursuant to the Affordable Care Act and
beneficiaries who were eligible for Medicaid prior to the eligibility expansion. We will also
determine the amount of payments associated with beneficiaries who received incorrect eligibility
determinations. Context—The Affordable Care Act, § 2001, authorized States to raise the Medicaid
minimum eligibility level to 133 percent of the Federal poverty level for nearly all Americans under
age 65 and authorized the use of an enhanced Federal medical assistance percentage of 100 percent
for newly eligible individuals. Eligibility errors could result in improper Medicaid payments and
improper State claims for Federal reimbursement. (OAS; W-00-14-31140; various reviews; expected
issue date: FY 2015; new start; Affordable Care Act)
State Adjustments of Federal Reimbursement
 State Medicaid monetary drawdowns—Reconciliation with Form CMS-64
State Adjustments—We will review the Medicaid monetary drawdowns that States received from
the Federal Reserve System to determine whether they were supported by actual expenditures
reported by the States on the Form CMS-64. Context—States draw monetary advances against a
continuing letter of credit certified to the Secretary of the Treasury in favor of the State payee
throughout a quarter. (42 CFR § 430.30(d)(4).) After the end of each quarter, States must submit
the Form CMS-64, which shows the disposition of Medicaid funds used to pay for actual medical and
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administrative expenditures for the reporting period. (42 CFR § 430.30(c).) The amounts reported
on the Form CMS-64 should reconcile the monetary advances for a quarter. (OAS; W-00-12-31456;
W-00-13-31456; various reviews; expected issue date: FY 2014; work in progress)
 State reporting of Medicaid collections on Form CMS-64
State Adjustments. We will determine whether States accurately captured Medicaid collections on
their Form CMS-64 and returned the correct Federal share related to those collections.
Context—Previous OIG work revealed multiple errors in compiling collection amounts on the Form
CMS-64, particularly errors related to the calculation of the Federal share returned. Collections
decrease the total expenditures reported for the period. (42 CFR §§ 433.154 and 433.320.) States
should compute the Federal share of collections at the rate at which the Federal Government
matched the original expenditures. (CMS’s State Medicaid Manual, § 2500.1(B).) (OAS;
W-00-12-31457; W-00-13-31457; various reviews; expected issue date: FY 2014; work in progress)
 Estate recoveries—Compliance and reporting of recovered costs
State Adjustments—We will determine whether States complied with requirements to recover
Medicaid costs from deceased Medicaid beneficiaries’ estates. We will also determine whether
States properly reported any such recoveries to CMS. Context—CMS requires that States report the
amounts States collected from deceased Medicaid beneficiaries’ estates on Form CMS-64 as
reductions to total Medicaid expenditures. States must, with certain exceptions, recoup medical
assistance costs from the estates of deceased beneficiaries who were institutionalized. (Social
Security Act, § 1917(b)(1).) States generally can recover the medical assistance costs of inpatient
stays at nursing facilities, intermediate care facilities for persons with intellectual disabilities, or
other medical institutions. States may also opt to recover costs of other services covered under the
States’ Medicaid plans if the individuals were 55 or older when the services were provided.
Beneficiaries’ estates include the real and personal property in the estates under the State’s probate
laws. (Social Security Act, § 1917(b)(4).) (CMS’s State Medicaid Manual, Pub. No. 45, pt. 2,
§ 2500.1.) (OAS; W-00-12-31113; W-00-13-31113; various reviews; expected issue date: FY 2014;
work in progress)
 State use of incorrect FMAP for Federal share adjustments (new)
State Adjustments. We will review States’ Medicaid claims records to determine whether the States
used the correct Federal Medical Assistance Percentage (FMAP) when processing claim adjustments
reported on the Form CMS-64. Context—We reviewed the claim adjustments reported on Form
CMS-64 for one State and determined that it did not use the correct FMAP for the majority of
adjustments. The Federal Government is required to reimburse a State at the FMAP rate in effect at
the time the expenditure was made (Social Security Act, § 1903(a)(1).) (OAS; W-00-14-31460;
various reviews; expected issue date: FY 2015; work in progress)
State Program Integrity Activities and Compliance With Federal
Requirements
 State actions to address vulnerabilities identified during CMS reviews
Program Integrity. We will review corrective actions that State Medicaid agencies have implemented
to address the findings and recommendations from State Medicaid program integrity reviews
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conducted by CMS. We will determine why States have not implemented all corrective actions,
examine the followup CMS performed to ensure that corrective actions were taken by States, and
examine the evidence CMS reviews to ensure that corrective actions were implemented. Context—
As part of its Medicaid Integrity Program (MIP) activities, CMS conducts a triennial review of each
State’s program integrity functions to assess their effectiveness and compliance with Federal
requirements. CMS issues to the State a final report of findings and recommendations and requires
the State to provide a corrective action plan within 30 days of the report issuance. The MIP was
established by the Deficit Reduction Act of 2005 (DRA), § 6034. (OEI; 00-00-00000; expected issue
date: FY 2015; new start)
 State terminations of providers terminated by Medicare or by other States
Program Integrity. We will review States’ compliance with a new requirement that they terminate
their Medicaid program providers that have been terminated under Medicare or by another State
Medicaid progam. We will determine whether such providers are terminated by all State Medicaid
programs in which they are enrolled, assess the status of the supporting information-sharing system,
determine how CMS is ensuring that States share complete and accurate information, and identify
obstacles States face in complying with the termination requirement. Context—The new
requirement became effective January 1, 2011. (Social Security Act, § 1902(a)(39), as amended by
the Affordable Care Act, § 6501.) (OEI; 06-12-00030; expected issue date: FY 2014; work in
progress; Affordable Care Act)
 Recovering Medicaid overpayments—Credit balances in Medicaid patient
accounts
Overpayment Recovery. We will review providers’ patient accounts to determine whether there are
Medicaid overpayments in accounts with credit balances. Context—Previous OIG work found
Medicaid overpayments in patients’ accounts with credit balances. Credit balances generally occur
when the reimbursement that a provider receives for services provided to a Medicaid beneficiary
exceeds the charges billed, such as when a provider receives a duplicate payment for the same
service from the Medicaid program or another third party payer. In such cases, the provider should
return the existing overpayment to the Medicaid program. When there is more than one payer,
Medicaid is the payer of last resort. (Social Security Act, § 1902(a)(25); 42 CFR Part 433, Subpart D;
various State laws; and CMS’s State Medicaid Manual, Pub. No. 45, Part 3, § 3900.1.) (OAS;
W-00-12-31311; W-00-13-31311; various reviews; expected issue date: FY 2014; work in progress)
 State collection and verification of provider ownership information
Program Integrity—We will determine the extent to which States and CMS collect and verify
required ownership information for provider entities enrolled in Medicare and Medicaid. We will
also review States’ and CMS’s practices for collecting and verifying provider ownership information
and determine whether States and CMS had comparable provider ownership information for
providers enrolled in both Medicaid and Medicare. Context—Federal regulations require Medicaid
and Medicare providers to disclose ownership information, such as the name, address, and date of
birth of each person with an ownership or control interest in the provider entity. (42 CFR § 455.104.)
(OEI; 04-11-00590, 04-11-00591, 04-11-00592; expected issue date: FY 2015; work in progress)
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 States' experiences with enhanced provider screening
Program Integrity. We will review States’ progress toward rescreening or revalidating all Medicaid
providers by 2016. We will assess how States are complying with the mandate to conduct enhanced
screening; determine how many providers are enrolled in both Medicare and Medicaid; and
determine whether States can use screenings from Medicare, other State Medicaid programs, and
CHIP. Context—The Affordable Care Act, § 6402, requires enhanced screening for providers and
suppliers seeking initial enrollment, re-enrollment, or revalidation in Medicare, Medicaid, and the
Children’s Health Insurance Program (CHIP). States are responsible for employing screening and
revalidation procedures for their Medicaid and CHIP providers. (OEI; 05-13-00520; expected issue
date FY 2015; work in progress; Affordable Care Act)
 Provider payment suspensions during pending investigations of credible fraud
allegations (new)
Program Integrity. We will review payments to providers with allegations of fraud deemed credible
by States. We will also review States’ suspension of payments processes. Context—Federal financial
participation in the Medicaid program is not available for items or services furnished by an individual
or entity when the State has failed to suspend payments during a period when there is a credible
allegation of fraud. (Social Security Act, 1903(i)(2), as amended by the Affordable Care Act,
§ 6402(h)(2).) Upon determinations that allegations of fraud are credible, States must suspend all
Medicaid payments to the providers, unless the States have good cause to not suspend payments or
to suspend payment only in part. (42 CFR § 455.23(a).) States are required to make fraud referrals
to MFCUs or to appropriate law enforcement agencies in States with no certified MFCUs. (42 CFR
§ 455.23(d).) We will determine if select Medicaid State agencies are in compliance with these
provisions. (OAS; W-00-14-31473; various reviews; expected issue date: FY 2015; new start; and
OEI; 09-14-00020; expected issue date: FY 2015; work in progress; Affordable Care Act)
OIG Oversight of State Medicaid Fraud Control Units
 Reviews of State Medicaid Fraud Control Units
Program Integrity. We will review the overall management, operations, and performance of a
sample of Medicaid Fraud Control Units (MFCU). We will identify effective practices and areas for
improvement in MFCU management and operations. Context—As part of its responsibility for
administering Federal grants to the MFCUs, OIG provides oversight and guidance to the MFCUs,
assesses MFCU compliance with Federal regulations and policy, and evaluates MFCU performance
under established performance standards. State MFCU reviews are part of periodic, indepth onsite
reviews of each MFCU. (OEI; 00-00-00000; various reviews; expected issue date: FY 2014; work in
progress).
 States and Territories without Medicaid Fraud Control Units (new)
Program Integrity. We will determine whether each of the U.S. territories, none of which currently
operate a MFCU, have sought an exemption as part of their State Medicaid plan as required by
section 1902(a)(61) of the Social Security Act. We will also determine whether North Dakota, the
only State without a MFCU and which received an exemption in 1994, continues to operate under
the conditions that supported the State’s exemption. Context—Each State and territory must
maintain a certified MFCU as part of a State Medicaid program, unless the HHS Secretary determines
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that operation of a MFCU would not be cost effective and that other safeguards are in place. (Social
Security Act, §§ 1902(a)(61) and 1101(a)(1).) The District of Columbia and 49 States have
established MFCUs. North Dakota was granted a waiver in 1994 and has not established a
MFCU. The United States territories of American Samoa, Guam, the Northern Mariana Islands,
Puerto Rico, and the U.S. Virgin Islands have also not established MFCUs but are required to operate
a MFCU as part of their Medicaid programs or receive an exemption. (OEI; 00-00-00000; expected
issue date: FY 2015; new start)
Medicaid Information System Controls and Security
Acronyms and Abbreviations for Selected Terms Used in This Section:
MMIS—Medicaid Management Information System
MSIS—Medicaid Statistical Information System
NPI—National Provider Identifier
PARIS—Public Assistance Reporting Information System
PHI—protected health information
Controls to Prevent Improper Medicaid Payments
 Inactive or invalid provider identifier numbers
Payment Controls. We will review Medicaid claims to determine the extent to which State agencies
have controls in place to identify claims associated with inactive or invalid NPIs, including claims for
services alleged to have been provided after the dates of the referring physicians’ deaths.
Context—In a prior OIG review, we found instances in which Medicare had paid medical equipment
and supplies claims with inactive or invalid NPIs for the referring physicians. In 2009, a U.S. Senate
oversight committee reported that a substantial volume of Medicare-paid medical claims contained
NPIs of deceased physicians. (OAS; W-00-13-31338; various reviews; expected issue date: FY 2015;
work in progress)
 Duplicate payments for beneficiaries with multiple Medicaid identification
numbers
Payment Controls. We will review duplicate payments made by States on behalf of Medicaid
beneficiaries with multiple Medicaid identification numbers and identify States’ procedures or other
controls for preventing such payments. Context—A preliminary data match identified a significant
number of individuals who were assigned more than one Medicaid identification number and for
whom multiple Medicaid payments were made for the same period. (OAS; W-00-12-31374;
W-00-13-31374; various reviews; expected issue date: FY 2014; work in progress)
 States' use of PARIS data matching to reduce improper payments
Payment Controls. We will review Public Assistance Reporting Information System (PARIS)
enrollment data and determine the extent to which States use PARIS to prevent improper Medicaid
payments made on behalf of beneficiaries who are simultaneously enrolled in more than one State.
Context—Federal law requires States’ Medicaid eligibility determination systems to provide data
matching through PARIS. (Social Security Act, § 1903, as amended by the Qualifying Individual
Program Supplemental Funding Act of 2008.) PARIS is a computer matching and information
exchange system administered by the Administration for Children and Families. Using States’
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enrollment data, PARIS identifies beneficiaries that may be concurrently enrolled in multiple State
Medicaid programs, as well as other means-tested programs, such as food stamps. (OEI;
09-11-00780; expected issue date: FY 2014; work in progress)
 National Correct Coding Initiative edits and CMS oversight (new)
Payment Controls. We will review selected States’ implementation of National Correct Coding
initiative (NCCI) edits for Medicaid claims and describe CMS's oversight of NCCI edits.
Context—The NCCI is a program consisting of coding policies and automatic computer edits. The
NCCI’s original purpose was to promote correct coding of health care services provided to Medicare
beneficiaries and to prevent payment for improperly coded services. Federal law required States to
incorporate compatible methodologies of the NCCI for Medicaid claims filed on or after October 1,
2010. (Social Security Act, § 1903(r), as amended by the Affordable Care Act, § 6507.) States were
permitted to deactivate some or all NCCI edits because of conflicts with State laws, regulations,
administrative rules, payment policies, and/or the States’ levels of operational readiness. (State
Medicaid Director Letter #10-017.) As of April 1, 2011, lack of operational readiness was no longer a
permissible basis for deactivation of the edits. (State Medicaid Director Letter #11-003.) After April
1, 2011, the only basis for deactivation is conflicts with State laws, regulations, administrative rules,
and/or payments policies. (OAS; W-00-13-31459; various reviews; expected issue date: FY 2014;
work in progress; and OEI; 00-00-00000; expected issue date: FY 2015; work in progress, Affordable
Care Act)
Controls to Ensure the Security of Medicaid Systems and Information
 CMS oversight of States' Medicaid information systems security controls (new)
System Security Controls. We will determine the adequacy of CMS's oversight of States’ Medicaid
system and information security controls, including the policies, technical assistance, and security
and operational guidance provided to the States. For selected States, we will use OIG’s automated
assessment tools to assess controls for their information system networks, databases, Web-facing
applications, logical access, and wireless access. We will also review general controls, such as
disaster recovery plans and physical security. Context—Prior OIG audits reported that States lack
sufficient security features, potentially exposing Medicaid beneficiary health information to
unauthorized access. State system controls for Medicaid data and transactions have not been
consistently applied and have not been adequately monitored by CMS pursuant to Federal
requirements for Automated Data Processing System Security and Review (45 CFR § 95.621(f).) CMS
is responsible for ensuring that appropriate security controls have been implemented. (OAS, W-0013-40019; W-00-14-40019; various reviews; expected issue date: FY 2014; work in progress and new
start)
Medicaid Managed Care
Managed care is a health delivery system that aims to maximize efficiency by negotiating rates,
coordinating care, and managing the use of services. State Medicaid agencies contract with managed
care organizations (MCOs) to provide comprehensive health services in return for a fixed, prospective
payment (capitated payment) for each enrolled beneficiary.
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Acronyms and Abbreviations for Selected Terms Used in This Section:
MCO—managed care organizations
MSIS—Medicaid Statistical Information System
OMB—Office of Management and Budget
State Payments to Managed Care Entities
 Medicaid managed care reimbursement (new)
State Payments toMCOs. We will review States’ managed care plan reimbursements to determine
whether managed care organizations (MCOs) are appropriately and correctly reimbursed for services
provided. We will ensure that the data used to set rates are reliable and include only costs for
services covered under the State plan as required by or costs of services authorized by CMS. (42 CFR
§438.6(e).) Also, we will verify that payments made under a risk-sharing mechanism and incentive
payments made to MCOs are within the limits set forth in Federal regulations. (42 CFR
§ 438.6(c)(5)(ii) and 42 CFR § 438.6(c)(5)(iii)&(iv).) Context—Previous GAO work found that CMS’s
oversight of States’ rate setting required improvement and that States may not audit or
independently verify the MCO reported data used to set rates. (GAO-10-810.) (OAS; W-00-1431471; various reviews; expected issue date: FY 2015; new start)
 Medical loss ratio—Managed care plans’ refunds to States
Adjustments to State Payments. We will review managed care plans with contract provisions that
require a minimum percentage of total costs to be expended for medical services (medical loss ratio)
to determine whether a refund was made to the State agency when the minimum medical loss ratio
threshold was not met. We will also determine whether plan expenses were properly classified as
medical or administrative. Context—Prior OIG work found that although the minimum medical loss
ratios were not met, the managed care plans did not make the required refunds to the State. States
must properly report expenditures and apply any applicable credits (such as refunds). (OMB Circular
A-87.) (OAS; W-00-13-31372; various reviews; expected issue date: FY 2015; work in progress)
Data Collection and Reporting
 Completeness and accuracy of managed care encounter data
Data Collection and Reporting. We will determine the extent to which complete Medicaid managed
care encounter data are included in Medicaid Statistical Management Systems (MSIS). We will also
identify factors that enable States' and Medicaid managed care entities to collect and report MSIS
encounter data or prevent them from performing these functions. Finally, we will assess CMS's
oversight of the reporting of MSIS encounter data. Context—A prior OIG review of 2007 data found
that although all 40 States with Medicaid managed care were collecting encounter data and most of
those States used the data, only 25 States included the data in their MSIS submissions to CMS. Of
the 25 States that included encounter data in their MSIS submissions, the MSIS files containing
encounter data varied by service (e.g., inpatient, pharmacy, long-term care) and eligibility, as did the
data elements reported in each file. Federal law requires States and MCOs to submit data elements
deemed necessary by the Secretary for use in program integrity, program oversight, and
administration. (Affordable Care Act, § 6504.) Federal Medicaid matching funds for the operation of
an MSIS are authorized pursuant to the Social Security Act, § 1903(a)(3)(B). Such matching funds can
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be withheld from States that fail to submit required Medicaid data, including encounter data. (Social
Security Act, §§ 1903(m)(2)(A) and 1903(r)(1).) (OEI; 07-13-00120; expected issue date: FY 2015;
work in progress; Affordable Care Act)
Program Integrity in Managed Care
 Medicaid managed care entities’ identification of fraud and abuse
Program Integrity—We will determine whether Medicaid MCOs identified and addressed potential
fraud and abuse incidents. We will also describe how States oversee MCOs’ efforts to identify and
address fraud and abuse. Context—A prior OIG report revealed that over a quarter of the MCOs
surveyed did not report a single case of suspected fraud and abuse to their State Medicaid agencies
in 2009. The report also found that MCOs and States are taking steps to address fraud and abuse in
managed care and they remain concerned about their prevalence. All MCOs are required to have
processes to detect, correct, and prevent fraud, waste, and abuse. However, the Federal
requirements surrounding these activities are general in nature (42 CFR § 438.608) and MCOs vary
widely in how they deter fraud, waste, and abuse. (OEI; 02-13-00640; expected issue date: FY 2015;
new start)
Beneficiary Protections in Managed Care
 Beneficiary access to services under medicaid managed care
Beneficiary Protections. We will review Medicaid managed care provider networks and describe
the extent to which managed care beneficiaries have access to services. We will also describe State
standards for ensuring access to primary and specialty care and will determine the extent to which
States identify and address problems with access to care in their managed care plans.
Context—States must ensure that managed care plans maintain and monitor a network of providers
that is sufficient to provide adequate access to all Medicaid services. (42 CFR §§ 438.202-210.)
In establishing and maintaining this network, managed care plans must consider the anticipated
Medicaid enrollment, the expected utilization of services, the number and types of providers
accepting new patients, and the geographic locations of providers and beneficiaries.
(OEI; 02-11-00320; 02-13-00670; expected issue date: FY 2014; work in progress; Affordable
Care Act)
 Medicaid managed care beneficiary grievances and appeals process
Beneficiary Protections. We will review the extent to which States monitor Medicaid MCOs’
grievances and appeals systems for compliance with Federal requirements. Context—States are
required to provide an opportunity for a fair hearing to any beneficiary whose Medicaid claim for
assistance is denied or not acted upon promptly. (Social Security Act, § 1902(a)(3).) Medicaid
managed care entities are required to establish internal grievance procedures under which
beneficiaries, or providers acting on their behalf, may challenge the denial of coverage of, or
payment for, medical services. (Social Security Act, § 1932(b)(4).) (OEI; 00-00-00000; expected issue
date: FY 2014; new start)
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 Oversight of managed care entities’ marketing practices
Beneficiary Protections. We will review State Medicaid agencies’ oversight policies, procedures, and
activities to determine the extent to which States monitor Medicaid MCOs’ marketing practices and
compliance with Federal and State contractual marketing requirements. We will also determine the
extent to which CMS ensures that States’ comply with Federal requirements involving Medicaid MCO
marketing practices. Context—No marketing materials may be distributed by Medicaid MCOs
without first obtaining States’ approval. (Social Security Act, § 1932(d)(2).) States are permitted to
impose additional requirements in contracts with MCOs about marketing activities. (42 CFR
§ 438.104.) (OEI; 00-00-00000; expected issue date: FY 2015; new start)
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CMS-Related
Legal and Investigative Activities
Acronyms and Abbreviations for Selected Terms Used in Part IV:
CIA—corporate integrity agreement
CMP—civil monetary penalty
CPG—compliance program guidance
DOJ—Department of Justice
FBI—Federal Bureau of Investigation
MFCU—[State] Medicaid Fraud Control Unit
Legal Activities
The Office of Inspector General’s (OIG) resolution of civil and administrative health care fraud cases
includes litigation of program exclusions and civil monetary penalities (CMP) and assessments. OIG also
negotiates and monitors corporate integrity agreements (CIA) and issues fraud alerts, advisory bulletins,
and advisory opinions. OIG develops regulations within its scope of authority, including safe harbor
regulations under the antikickback statute, and provides compliance program guidance (CPG). OIG
encourages health care providers to promptly self-disclose conduct that violates Federal health care
program requirements and provides them a self-disclosure protocol and guidance.
Exclusions From Program Participation
OIG may exclude individuals and entities from participation in Medicare, Medicaid, and all other Federal
health care programs for many reasons, some of which include program-related convictions, patient
abuse or neglect convictions, licensing board disciplinary actions, or other actions that pose a risk to
beneficiaries or programs. (Social Security Act, § 1128, § 1156, and other statutes.) Exclusions are
generally based on referrals from Federal and State agencies. We work with these agencies to ensure
the timely referral of convictions and licensing board and administrative actions. In fiscal year (FY) 2013,
OIG excluded 3,214 individuals and entities from participation in Federal health care programs.
Searchable exclusion lists are available on OIG’s Web site at:
•
http://exclusions.oig.hhs.gov/
Civil Monetary Penalties
OIG pursues CMP cases, when supported by appropriate evidence, on the basis of the submission
of false or fraudulent claims; the offer, payment, solicitation, or receipt of remuneration (kickbacks) in
violation of the Social Security Act, § 1128B(b); violations of the Emergency Medical Treatment and
Labor Act of 1986 (EMTALA); items and services furnished to patients of a quality that fails to meet
professionally recognized standards of health care; and other conduct actionable under the Social
Security Act, § 1128A, or other CMP authorities delegated to OIG.
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False Claims Act Cases and Corporate Integrity Agreements
When adequate evidence of violations exists, OIG staff members work closely with prosecutors from the
Department of Justice (DOJ) to develop and pursue Federal false claims cases against individuals and
entities that defraud the Government. Authorities relevant to this work come from the False Claims
Amendments Act of 1986 and the Fraud Enforcement and Recovery Act of 2009. We assist DOJ
prosecutors in litigation and settlement negotiations arising from these cases. We also consider whether
to invoke our exclusion authority on the basis of the defendants’ conduct. When appropriate and
necessary, we require defendants to implement CIAs aimed at ensuring compliance with Federal health
care program requirements.
Providers’ Compliance With Corporate Integrity Agreements
OIG often negotiates compliance obligations with health care providers and other entities as part of
the settlement of Federal health care program investigations arising under a variety of civil false claims
statutes. Subsequently, OIG assesses providers’ compliance with the terms of the integrity agreements.
For example, we conduct site visits to entities that are subject to integrity agreements to verify
compliance, to confirm information submitted to us by the entities, and to assess the providers’
compliance programs. We review a variety of information submitted by providers to determine whether
their compliance mechanisms are appropriate and identify problems and establish a basis for corrective
action. When warranted, we impose sanctions, in the form of stipulated penalties or exclusions, on
providers that breach integrity agreement obligations. Current CIAs and other integrity agreements are
listed on OIG’s Web site at:
•
http://oig.hhs.gov/fraud/cia/cia_list.asp
Advisory Opinions and Other Industry Guidance
To foster compliance by providers and industry groups, OIG responds to requests for formal advisory
opinions on applying the antikickback statute and other fraud and abuse statutes to specific business
arrangements or practices. Advisory opinions provide meaningful advice on statutes in specific factual
situations. We also issue special fraud alerts and advisory bulletins about practices that we determine
are suspect and CPG for specific areas. Examples are available on OIG’s Web site at:
•
Advisory Opinions: http://oig.hhs.gov/fraud/advisoryopinions.asp
•
Fraud Alerts: http://oig.hhs.gov/compliance/alerts/index.asp
•
Compliance Guidance: http://oig.hhs.gov/fraud/complianceguidance.asp
•
Open Letters: http://oig.hhs.gov/fraud/openletters.asp
•
Other Guidance: http://oig.hhs.gov/compliance/alerts/guidance/index.asp
Provider Compliance Training
In spring 2011, OIG and its government partners provided in-person provider compliance training in
Houston, Tampa, Kansas City, Baton Rouge, Denver, and Washington, DC. The sessions focused on the
realities of Medicare and Medicaid fraud and the importance of implementing an effective compliance
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program. To expand access to providers nationwide, we broadcasted a free online live Webcast of the
May 18 training in Washington. A complete video of the training is available on OIG’s Provider
Compliance Training Web site along with corresponding slides and written handouts. Also available are
13 educational video and audio podcasts covering various topics to help prevent fraud, waste, and
abuse. Our provider compliance training effort continues.
Provider Self-Disclosure
OIG is committed to assisting health care providers and suppliers in detecting and preventing fraud and
abuse. Since 1998, we have made available comprehensive guidelines describing the process for
providers to voluntarily submit to OIG self-disclosures of fraud, waste, or abuse. The Provider
Self-Disclosure Protocol gives providers an opportunity to minimize the potential costs and disruption
that a full-scale OIG audit or investigation might entail if fraud is uncovered. In doing so, the
self-disclosure also enables the provider to negotiate a fair monetary settlement and potentially avoid
being excluded from participation in Federal health care programs.
The protocol guides providers and suppliers through the process of structuring a disclosure to OIG about
matters that constitute potential violations of Federal laws (as opposed to honest mistakes that may
have resulted in being overpaid by a Federal program). The provider or supplier is expected to
thoroughly investigate the nature and cause of the matters uncovered and make a reliable assessment of
their economic impact (e.g., an estimate of the losses to Federal health care programs). OIG evaluates
the reported results of each internal investigation to determine the appropriate course of action. The
self-disclosure guidelines are available on the OIG Web site at:
•
http://oig.hhs.gov/fraud/selfdisclosure.asp.
On April 17, 2013, OIG updated its Provider Self-Disclosure Protocol, which is available at:
•
http://oig.hhs.gov/compliance/self-disclosure-info/files/Provider-Self-Disclosure-Protocol.pdf
Investigative Activities
OIG conducts and coordinates criminal, civil, and administrative investigations of fraud, waste, abuse,
and misconduct related to more than 300 HHS programs and operations. The investigations include
Medicare and Medicaid fraud, failure-of-care cases, child support enforcement violations, grant and
contract fraud, computer intrusions, and employee misconduct. Investigations can lead to criminal
prosecutions and program exclusions; recovery of damages and penalties through criminal, civil, and
administrative proceedings; and corrective management actions, regulations, or legislation. Each year,
thousands of complaints from various sources are brought to OIG’s attention for review, investigation,
and resolution. The nature and volume of complaints and priority of issues vary from year to year.
We describe some of the more significant investigative outcomes in OIG’s Semiannual Report(s) to
Congress, which are available on our Web site at:
•
http://oig.hhs.gov/publications.asp.
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See also OIG’s Consumer Alerts at:
•
http://oig.hhs.gov/fraud/consumer-alerts/index.asp.
Medicare Fraud Strike Force Teams and Other Collaboration
OIG devotes significant resources to investigating Medicare and Medicaid fraud. We conduct
investigations in conjunction with other law enforcement entities, such as the Federal Bureau of
Investigation (FBI), the United States Postal Inspection Service, the Internal Revenue Service (IRS), and
State Medicaid Fraud Control Units (MFCU).
The Health Care Fraud Prevention and Enforcement Action Team (HEAT) was started in 2009 by
the Department of Health and Human Services (HHS) and DOJ to strengthen programs and invest in
new resources and technologies to prevent and combat health care fraud, waste, and abuse. Using a
collaborative model, Medicare Fraud Strike Force teams coordinate law enforcement operations among
Federal, State, and local law enforcement entities. These teams, now a key component of HEAT, have a
record of successfully analyzing data to quickly identify and prosecute fraud.
Strike Force teams were formed in March 2007 and are operating in nine major cities. The effectiveness
of the Strike Force model is enhanced by interagency collaboration within HHS. For example, we refer
credible allegations of fraud to CMS so it can suspend payments to perpetrators. During Strike Force
operations, OIG and CMS work to impose payment suspensions that immediately prevent losses from
claims submitted by Strike Force targets. In support of strike force operations, OIG:
•
investigates individuals, facilities, or entities that, for example, bill or are alleged to have billed
Medicare and/or Medicaid for services not rendered, claims that manipulate payment codes to
inflate reimbursement amounts, and false claims submitted to obtain program funds;
•
investigates business arrangements that allegedly violate the Federal health care antikickback
statute and the statutory limitation on self-referrals by physicians; and
•
examines quality-of-care and failure-of-care issues in nursing facilities, institutions,
community-based settings, and other care settings and instances in which Federal programs may
have been billed for services that were medically unnecessary, not rendered or not rendered as
prescribed, or the care was so deficient that it constituted “worthless services.”
Other areas of investigation include Medicare and Medicaid drug benefit issues and assisting CMS
in identifying program vulnerabilities and schemes, such as prescription shorting (a pharmacy’s
dispensing of fewer doses of a drug than prescribed, but charging the full amount).
Working with law enforcement partners at the Federal, State, and local levels, we investigate schemes
that illegally market, obtain, and distribute prescription drugs. In doing so, we seek to protect Medicare
and Medicaid from making improper payments, deter the illegal use of prescription drugs, and curb the
danger associated with street distribution of highly addictive medications.
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We assist State Medicaid Fraud Control Units to investigate allegations of false claims submitted to
Medicaid and will continue to strengthen coordination between OIG and organizations such as the
National Association of Medicaid Fraud Control Units and the National Association for Medicaid Program
Integrity. Highlights of recent enforcement actions to which OIG has contributed are posted to OIG’s
Web site at http:// oig.hhs.gov/fraud/enforcement/criminal/.
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Public Health Reviews
Public health activities and programs represent the country’s primary defense against acute and chronic
diseases and disabilities and provide the foundation for the Nation’s efforts to promote and enhance the
health of the American people. Our reviews of public health agencies within the Department of Health
and Human Services (HHS) generally include the following:
•
Agency for Healthcare Research and Quality (AHRQ). AHRQ sponsors and conducts research that
provides evidence-based information on health care outcomes, quality, costs, use, and access.
•
Centers for Disease Control and Prevention (CDC). CDC operates a health surveillance system to
monitor and prevent disease outbreaks, including bioterrorism; implements disease prevention
strategies; and maintains national health statistics.
•
Food and Drug Administration (FDA). FDA is responsible for ensuring the safety of the Nation’s
food, drugs, medical devices, biologics, cosmetics, and animal food and drugs.
•
Health Resources and Services Administration (HRSA). HRSA maintains a safety net of health
services for people who have low income or are uninsured or who live in rural areas or urban
neighborhoods where health care is scarce.
•
Indian Health Service (IHS). IHS provides or funds health care services for American Indians and
Alaska Natives.
•
National Institutes of Health (NIH). NIH supports medical and scientific research examining the
causes of and treatments for diseases, such as cancer, human immunodeficiency virus (HIV), and
acquired immunodeficiency syndrome (AIDS).
•
Substance Abuse and Mental Health Services Administration (SAMHSA). SAMHSA funds services to
improve the lives of people who have or are at risk for mental and substance abuse disorders.
Issues related to public health are also addressed within the Office of the Secretary. For example, the
Office of the Assistant Secretary for Preparedness and Response (ASPR) serves as the Secretary’s
principal advisor on matters related to Federal public health preparedness and response to public health
emergencies. The functions of the Office of the Assistant Secretary for Health (OASH) include overseeing
the protection of volunteers involved in research.
Acronyms and Abbreviations for Selected Organizations and Terms:
AIDS—acquired immunodeficiency syndrome
FAR—Federal Acquisition Regulation
HIV—human immunodeficiency virus
OMB—Office of Management and Budget
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Agency for Healthcare Research and Quality
 AHRQ—Early implementation of patient safety organizations
Quality of Care and Safety. We will review the policies and activities of Patient Safety Organizations
(PSOs) to determine the extent of hospitals’ participation in such activities, identify PSOs’ practices
for receiving and analyzing adverse event reports, and determine the extent to which PSOs provide
information to health care providers and the Network of Patient Safety Databases maintained by
AHRQ. We will evaluate PSOs’ efforts to identify and resolve patient safety problems in hospitals and
identify any barriers to the full and effective implementation of the PSO program. Context—A prior
OIG review found that hospitals did not identify all serious adverse events, suggesting that hospital
incident-reporting systems may be an unreliable source of information for PSOs. PSOs are
nongovernmental entities certified by HHS to collect and analyze reports of adverse events from
hospitals and other health care settings. (Patient Safety and Quality Improvement Act of
2005.) Adverse events are harm, such as infections or injury, caused to patients during medical care.
(OEI; 06-14-00080; expected issue date: FY 2015; work in progress)
Centers for Disease Control and Prevention
 CDC—World Trade Center Health program: review of medical claims (new)
Funds Management. We will review World Trade Center Health Program (WTCHP) expenditures to
assess the reasonableness of billing, payments, and administrative costs. Context—Prior Federal
audits found that that CDC did not reliably estimate costs for monitoring and treating program
beneficiaries. Pursuant to the enabling law, medical services are provided to eligible responders and
survivors with health conditions related to the September 11, 2001, terrorist attacks on the World
Trade Center through contracted facilities known as “Clinical Centers of Excellence.” The WTCHP was
established in January 2011 and is administered by CDC. (James Zadroga 9/11 Health and
Compensation Act of 2010 and Public Health Service Act, § 3301(d).)
(OAS; W-00-14-59040; expected issue date: FY 2014; new start).
 CDC—Oversight of HIV/AIDS prevention and research grants
Grants Management. We will assess whether CDC’s oversight of HIV/AIDS prevention and research
grants was conducted in accordance with Federal regulations and HHS policies. Context—During
FYs 2007 through 2011, CDC awarded more than $3.6 billion in grants for HIV/AIDS prevention and
research. The grants are important tools in carrying out CDC’s responsibility for meeting the goals of
the National HIV/AIDS Strategy for the United States. (OEI; 00-00-00000; expected issue date:
FY 2015; new start)
 CDC—Award process for the President’s Emergency Plan for AIDS Relief
cooperative agreements
Cooperative Agreements. We will review CDC’s award process for the cooperative agreements that
it awarded under the President’s Emergency Plan for AIDS Relief (PEPFAR) program to ensure
compliance with applicable laws, regulations, and departmental guidance. The review will include
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awards made to both foreign and domestic recipients. Context—During previous reviews of CDC’s
award monitoring process, we noted possible deficiencies, such as conflicting, missing or inaccurate
information in the Funding Opportunity Announcement and the Notice of Award. The Grants Policy
Directive, Part 2, § 04, specifies the process for competitive review, ranking applications, approval of
applications, and award policy. (OAS; W-00-13-58311; expected issue date: FY 2014; new start)
 CDC—Accountability for property (new)
Property Management. We will determine whether CDC implemented recommendations that OIG
previously made on the basis of an audit of CDC's property system. Context—CDC maintains various
types of accountable property in the United States and overseas. In a previous report, we
recommended that CDC improve its controls over property. Specifically, we recommended that CDC
adjust the property system to reflect the results of the annual physical inventory; remove from the
property system any lost or missing property; ensure that all newly acquired property items are
barcoded and correctly added to the property system; and reconcile the general ledger to the
property system to identify and resolve discrepancies. As of January 2013, CDC had 60,820 items of
accountable property in its inventory, representing an original purchase cost of about $455 million.
(OAS; W 00-14-59025; expected issue date: FY 2014; new start)
 CDC—Oversight of security of the strategic national stockpiles of
pharmaceuticals
Quality of Care and Safety—We will review CDC’s efforts to ensure that pharmaceutical stockpiles
are secure from theft, tampering, or other loss. We will use the guidelines established in the
Department of Homeland Security’s (DHS’s) Physical Security Manual to assess security risks at
selected stockpiles. Context—The Strategic National Stockpile program, for which CDC and DHS
share management responsibility, is designed to supplement and restock State and local public
health agency pharmaceutical supplies in the event of a biological or chemical incident in the United
States or its territories. The stockpiles are stored at strategic locations for the most rapid distribution
possible. CDC is responsible for ensuring that the materials in these facilities are adequately
protected and stored. (OAS; W-00-13-58310; expected issue date: FY 2014; new start)
Food and Drug Administration
 FDA—Inspection of generic drug manufacturers (new)
Drug Inspections and Approvals. We will describe the extent to which FDA conducts inspections of
generic drug manufacturers. We will also describe the results of such inspections and the
enforcement actions taken by FDA in response to shortcomings or deficiencies found.
Context—FDA typically inspects drug manufacturing facilities prior to generic drug approval and also
conducts routine inspections of both foreign and domestic manufacturers to monitor compliance
with current good manufacturing practices. Generic drugs are copies of FDA-approved brand name
drugs that must be equivalent to the original drug with respect to conditions of use, active
ingredient(s), route of administration, dosage form, strength, labeling, and performance
characteristics. Pharmaceutical companies must receive FDA approval prior to marketing and
manufacturing a new generic drug. (OEI; 01-13-00600; expected issue date: FY 2014; work in
progress)
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Health Resources and Services Administration
 HRSA—Contract pharmacy arrangements in the 340B Program
Program Integrity. We will assess the extent to which selected 340B-covered entities and HRSA
oversee contract pharmacies’ compliance with 340B Program requirements. Context—The 340B
Drug Pricing Program (Public Health Service Act, § 340B) requires that manufacturers who sell
covered outpatient drugs to covered entities listed in the statute must charge a price that will not
exceed the amount determined under a statutory formula. 340B-covered entities may contract with
pharmacies to provide services to the covered entities’ patients. Covered entities are required to
ensure that the contracted pharmacies comply with certain 340B Program requirements. (75 Fed.
Reg. 10272, 10278.) For example, contract pharmacies are required to have tracking systems in
place to prevent diversion of 340B-purchased drugs to people who are not patients of the
340B-covered entities that paid for the drugs. (42 U.S.C. 256b(a)(5)(B).) Contract pharmacies must
also have systems in place to prevent subjecting drug manufacturers to paying Medicaid rebates on
drugs already sold to 340B-covered entities at the discounted 340B price, a situation referred to as
duplicate discounts. (U.S.C. 256b(a)(5)(A)(i).) HRSA administers the 340B Progam and oversees
covered entities’ contract pharmacy arrangements. (OEI; 05-13-00430; 05-13-00431; expected issue
date: FY 2014; work in progress)
 HRSA—340B-covered entities access to 340B ceiling prices (new)
Program Integrity. We will determine what steps HRSA has taken to address the OIG’s previous
recommendation to provide 340B covered entities with access to 340B ceiling prices and what
obstacles HRSA faces in implementing this recommendation. We will also determine whether drug
manufacturers are overcharging 340B covered entities. Context—In 2005 and 2006, OIG made
several recommendations to HRSA to strengthen its oversight of the 340B Program, including a
recommendation that HRSA provide covered entities with 340B ceiling prices to detect overcharges.
The Affordable Care Act, §7102, codified this recommendation by requiring HRSA to share 340B
ceiling prices with covered entities. (OEI; 05-13-00510; expected issue date: FY 2014; work in
progress; Affordable Care Act)
Indian Health Service
 IHS—Hospital oversight (new)
Quality of Care and Safety. We will examine Indian Health Service (IHS) hospitals’ efforts to ensure its
hospitals provide quality inpatient care. We will examine IHS’s efforts to monitor each hospital’s ability
to provide quality care and maintain compliance with Medicare conditions of participation and will
identify which quality or compliance problems are most common. Context—IHS operates 28 acute care
hospitals that provide inpatient care to eligible American Indians and Alaska Natives. IHS hospitals are
monitored through periodic on-site surveys by State Agencies or CMS-approved accrediting
organizations that assess compliance with Medicare conditions of participation. (OEI; 09-13-00280; 0614-00010; expected issue date: FY 2014; work in progress)
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National Institutes of Health
 NIH—Superfund financial activities for fiscal year 2013
Funds Management. We will review payments, obligations, reimbursements, and other uses of
Superfund money by NIH’s National Institute of Environmental Health Sciences. Context—Federal
law and regulations require that OIG conduct an annual audit of the Institute’s Superfund activities.
(Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C.
§ 9611(k).) (OAS; W-00-12-56030; W-00-13-56030; expected issue date: FY 2014; new start)
 NIH—Extramural construction grants
Grantee Compliance. We will perform reviews at facilities that received extramural construction
grants to determine whether funds were spent in accordance with Federal requirements. We will
determine whether appropriate bidding procedures were followed and whether expenditures were
allowable under the terms of the grants and applicable Federal requirements. Context—Extramural
construction grants are awarded to build, renovate, or repair non-Federal biomedical and behavioral
research facilities. The intended recipients of these awards are institutions of higher education as
well as nonprofit and regional organizations across the country. (42 CFR Part 52b, 45 CFR Part 74,
2 CFR Part 215, 2 CFR Part 220, and 2 CFR Part 225.) (OAS; W-00-13-50042; various reviews;
expected issue date: FY 2015; new start)
 NIH—Colleges’ and universities’ compliance with cost principles
Grantee Compliance. We will assess colleges’ and universities’ compliance with selected cost
principles issued by OMB in Circular A-21, Cost Principles for Educational Institutions. Context—We
will conduct reviews at selected colleges and universities on the basis of the dollar value of Federal
grants received and on input from HHS operating divisions and the offices of the Assistant Secretary
for Financial Resources and the Assistant Secretary for Administration. (OAS; W-00-13-50037;
various reviews; expected issue date: FY 2014; new start )
 NIH—Oversight of grants management policy implementation
Grants Management. We will examine the NIH’s oversight of the grants administration processes
implemented by the 24 institutes and centers (IC) that award extramural grants. We will also
examine NIH’s oversight of each IC’s compliance with regulations, department directives, and agency
policies. Context—NIH issues grants administration policy to the ICs and oversees ICs’ compliance
with Federal regulations and departmental guidance. Each IC maintains a Grants Administration
Office that implements its own procedures. Federal regulations establish uniform administrative
requirements governing HHS grants. (45 CFR Parts 74 and 92.) The HHS Grants Policy Directives and
the NIH Grants Policy Statement provide guidance on implementing the regulations. (OEI;
07-11-00190; various reviews; expected issue date: FY 2014; work in progress)
 NIH—Use of appropriated funds for contracting (new)
Use of Funds. We will review the appropriateness of NIH’s obligation of appropriated funds for the
services it obtains through contracts to ensure that appropriated funds were used only during their
period of availability in accordance with the Anti-Deficiency Act of 1950 (Anti-Deficiency Act) and
were used only for a bona fide need arising in the fiscal year for which the appropriation was made.
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We will review contracts and contract modifications in order to quantify any errors. Context—Prior
reviews identified problems in the use of appropriated funds for various NIH contracts. Key
provisions of the Anti-Deficiency Act prohibit the Government from obligating or expending funds in
advance of an appropriation unless authorized by law. (31 U.S.C § 1341(a)(1).) Also, appropriations
may be used only for bona fide needs arising in the fiscal year for which the appropriation was
made. (31 U.S.C. § 1502.) We will issue a summary report of corrective actions taken to address
weaknesses identified in our reports. (OAS, W-00-10-52314; various reviews; expected issue date
FY 2014; work in progress)
Substance Abuse and
Mental Health Services Administration
 SAMHSA—Reporting and oversight of the Substance Abuse Treatment Block
Grant program performance
Grantee Performance. We will determine the extent to which SAMHSA and States are overseeing
and reporting performance for the Substance Abuse Prevention and Treatment Block Grant program.
Context—The program’s goals are to prevent substance abuse and to to improve access,
reduce barriers, and promote effective treatment and recovery services for people who have alcohol
and drug abuse problems. Federal law requires Federal agencies to develop long-term strategic
plans defining goals and objectives for their programs and to report the extent to which the goals are
met. (Government Performance and Results Act of 1993.) (OEI; 04-12-00160; various reviews;
expected issue date: FY 2014; work in progrress)
Other Public-Health-Related Reviews
 Hurricane Sandy—HHS use of volunteer medical personnel to respond (new)
Disaster Response. We will describe the use of Medical Reserve Corps (MRC) volunteers in New
Jersey and New York during the Hurricane Sandy response. We will assess the availability of
volunteers across specialties, determine how quickly volunteers were deployed, determine how
States ensured that volunteers were appropriately qualified to render medical assistance, and
describe any challenges and successes encountered while using MRC volunteers. Context—MRC is a
national network of volunteers that are organized and managed at the local level. These volunteers
provide various services, such as supporting local public health activities and assisting in emergency
preparedness response and recovery. More than 600 volunteers weredeployed within New York and
New Jersey during the Hurricane Sandy response. (OEI; 04-13-00350; expected issue date: FY 2014;
work in progress)
 Hurricane Sandy—Social Services Block Grant guidance, disbursement, and
reporting summary (new)
Disaster Response. We will assess guidance, disbursement, and reporting related to the $500 million
in Hurricane Sandy disaster funding transferred to the Social Services Block Grant (SSBG). We will
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determine when HHS and States provided guidance to grantees regarding the expenditure of the
funds, the timeliness with which HHS and States disbursed awards, and what reporting requirements
were put in place. We will also describe challenges that States and their subgrantees encountered in
accessing and using disaster funding. Context—The Disaster Relief Appropriations Act of 2013
provided additional funds to the SSBG program to address necessary expenses resulting from
Hurricane Sandy, including social, health, and mental health services for individuals, and for repair,
renovation, and rebuilding of health care facilities, child care facilities, and other social services
facilities. (OEI; 07-13-00390; expected issue date: FY 2015; work in progress)
Public Health Legal Activities
OIG assists the Department of Justice (DOJ) in resolving civil and administrative fraud cases and
promoting compliance of HHS grantees. We assist DOJ in developing and pursuing Federal False Claims
Act cases against institutions that receive grants from NIH and other public health service agencies.
We also assist DOJ prosecutors in litigation and in settlement negotiations.
 Violations of select agent requirements
Compliance With Requirements. In 2005, HHS issued a final regulation on possession, use, and
transfer of select (biological) agents and toxins that applies to academic institutions; commercial
manufacturing facilities; and Federal, State, and local laboratories. (70 Fed. Reg. 13294 (March 18,
2005), 42 CFR Part 73.) The rule authorizes OIG to conduct investigations and to impose civil
monetary penalties against individuals or entities for violations of these requirements. We are
continuing to coordinate efforts with CDC, the Federal Bureau of Investigation, and the Department
of Agriculture to investigate violations of Federal requirements for the registration, storage, and
transfer of select agents and toxins.
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Human Services Reviews
The principal Department of Health and Human Services (HHS) agencies that administer human services
programs are the:
•
Administration for Children and Families (ACF). ACF operates over 30 programs that promote the
economic and social well-being of children, families, and communities, including Temporary
Assistance for Needy Families (TANF); the national child support enforcement (CSE) system; the Head
Start program for preschool children; and assistance for child care, foster care, and adoption
services.
•
Administration for Community Living (ACL). ACL includes the Administration on Aging (AoA), which
provides services such as meals, transportation, and caregiver support to older Americans at home
and in the community through the nationwide network of services for the aging.
Acronyms and Abbreviations for Selected Terms:
CCDF—Child Care and Development Fund
CSE—child support enforcement
CSGB—Community Services Block Grant [program]
TANF—Temporary Assistance for Needy Families [program]
Descriptions of the Office of Inspector General’s (OIG) human services work in progress and planned
new starts for fiscal year (FY) 2012 follow.
Administration for Children and Families
 CSGB—Compliance with monitoring and reporting requirements (new)
Grants Management. We will determine whether ACF complied with certain Federal monitoring and
reporting requirements identified in the Community Opportunities, Accountability, and Training and
Education Services Act of 1998 and the Omnibus Reconciliation Act of 1981. Context—In 2006, the
Government Accountability Office (GAO) reported that ACF lacked effective internal controls in the
Community Services Block Grant (CSGB) program. OIG conducted a subsequent review to determine
whether ACF had taken corrective actions to address GAO’s recommendations. OIG reported that
ACF had developed written policies and procedures and that another followup review would be
performed to evaluate the effectiveness of the newly implemented policies and procedures. ACF
oversees several programs that provide a range of human and economic development services and
activities that address the causes and characteristics of poverty and otherwise assist persons in
need. ACF monitors grantees' use of funds and reports annually to Congress on the use of the funds.
(OAS;
W-00-13-59026; A-01-13-02505; W-00-14-59026; expected issue date FY 2014; work in progress)
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 TANF—Compliance and oversight of work participation verification and
reporting requirements
Grants Management. We will review the extent to which States comply with TANF work verification
plan requirements. We will review ACF’s oversight of States’ compliance with work verification plan
and reporting requirements. We will also assess ACF’s oversight of tribes’ compliance with Tribal
Family Assistance Plan requirements under TANF. Context—TANF provides assistance and work
opportunities to needy families by granting States Federal funds and wide flexibility to develop and
implement their own welfare programs. Regulations implementing the TANF program include,
among other things, the requirement that States ensure that 50 percent of all families and 90
percent of two-parent families are working and that States report and verify work activities. (45 CFR
Parts 261-265.) (OEI; 09-11-00490; 09-11-00491; expected issue date: FY 2014; work in progress)
 CCDF—Child Care Development Fund direct services
Compliance With Requirements. We will review States’ Child Care and Development Fund (CCDF)
programs, which are developed on the basis of the approved CCDF State plan and State regulations,
to determine the extent to which States have established controls for determining eligibility of the
family to receive services, regulating and monitoring the child care providers, and ensuring proper
payment for services. We will also review the extent to which States complied with Federal
regulations when developing their CCDF programs. Context—The CCDF assists low-income families,
families receiving temporary public assistance, and families transitioning from public assistance in
obtaining child care so that family members can work or attend training or education. (Child Care
and Development Block Grant Act of 1990, Social Security Act, § 418, and 45 CFR Part 98.) (OAS;
W-00-12-25053; W-00-13-25053; various reviews; expected issue date: FY 2014; work in progress
and new start)
 CCDF—Child Care Development Fund targeted funds
Compliance With Requirements. We will review CCDF targeted funds to determine the extent to
which States comply with Federal regulations in the expenditure of the funds. Context—Some CCDF
funds are designated for targeted purposes, such as improving quality of child care, and are
authorized in annual appropriations. (Child Care and Development Block Grant Act, § 658B.)
Targeted activities are 100 percent federally funded. (45 CFR 98.60(d).) (OAS; W-00-12-25054;
W-00-13-25054; various reviews; expected issue date: FY 2014; work in progress and new start)
 CCDF—Licensing and oversight of health and safety standards at Federally
funded facilities
Compliance With Requirements. We will review licensing, health, and safety standards at child care
facilities that received Federal funding from the CCDF to determine the extent to which the facilities
have complied with applicable State and Federal requirements. We will also assess ACF’s oversight
of States’ licensing, health, and safety requirements for CCDF-funded child care facilities.
Context—Federal regulations for the CCDF require States to certify that they have licensing and
health and safety requirements applicable to child care services pursuant to 45 CFR §§ 98.15, 98.40
and 98.41. (OAS; W-00-12-25052; W-00-13-25052; various reviews; expected issue date: FY 2014;
work in progress and new start)
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 Foster care and adoption assistance maintenance payments (new)
Compliance With Requirements. We will determine whether State agencies claimed foster care
maintenance payments and adoption assistance payments in accordance with Federal requirements.
Context—Prior OIG audits found that States claimed costs for services that did not meet the
requirements for the foster care and the adoption assistance programs. (Social Security Act,
Title IV-E.) (OAS; W-00-12-24100; W-00-13-24100; various reviews; expected issue date: FY 2014;
work in progress and new start)
 Foster care—State oversight and coordination of health services for children
Compliance With Requirements. We will determine the extent to which States provide oversight and
coordination of health services for children in foster care, as required. For selected States, we will
determine the extent to which children in foster care receive health care services as outlined in
States' health oversight and coordination plans. Context—Each State is required to develop a plan
for ongoing oversight and coordination of health care services for children in foster care. (The
Fostering Connections to Success and Increasing Adoptions Act of 2008.) States’ plans must include
certain elements, such as a schedule for initial and followup health screening and oversight of
prescription medicines. (OEI; 07-13-00460; expected issue date: FY 2014; work in progress)
 Child support enforcement—State and local protection of child support
information
Compliance With Requirements. We will determine whether selected State and local child-support
enforcement programs complied with Federal regulations to protect child support information. We
will also determine the extent to which State and local child support enforcement programs monitor
access to data in child support enforcement systems and impose penalties for unauthorized access
or use. States are required to establish safeguards to prevent unauthorized access or use of child
support information in their computerized child support enforcement systems. (Social Security Act,
§ 454(26) and 45 CFR 307.13.) These safeguards must include developing written policies,
monitoring access to the system, training employees to protect the information, and imposing
penalties for unauthorized access to or disclosure of child support information. (OEI; 04-12-00050;
expected issue date: FY 2015; work in progress)
 Child support enforcement—Investigations under the child-support
enforcement task force model
Coordinated Enforcement. We will continue to encourage and coordinate enforcement efforts in
States, particularly in States that have not pursued prosecutions of nonsupport cases. Context—
Project Save Our Children seeks to identify, investigate, and prosecute individuals who fail to meet
their court-ordered support obligations. The project brings together OIG, the U.S. Marshals Service,
the Departments of Justice (DOJ) and State, local law enforcement agencies and prosecutors, State
child support agencies, and others to enforce Federal and State criminal child support statutes.
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Administration for Community Living
 ACL—Senior Medicare Patrol projects’ performance data
Grantee Performance. We will review performance measures for the Senior Medicare Patrol
projects, including documentation supporting expected recoveries for the Medicare and Medicaid
programs. Context—In 1997, SMP projects were established to recruit and train retired
professionals and other senior citizens to recognize and report instances or patterns of health care
fraud. The initiative stemmed from recommendations in a Congressional committee report
accompanying the Omnibus Consolidated Appropriations Act of 1997. OIG reports this performance
data annnually. The information was requested by the Administration on Aging (AoA), which is part
of ACL, and will support ACL’s efforts to evaluate and improve the performance of the projects. (OEI;
00-00-00000; expected issue date: FY 2014; new start)
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Other HHS-Related Reviews
Certain financial, performance, and investigative issues cut across Department of Health and Human
Services (HHS) programs. The Office of Inspector General’s (OIG) work in progress and its planned work
address departmentwide matters, such as financial statement audits; financial accounting; information
systems management; and other departmental issues, including discounted airfares and protections for
people in residential settings who have disabilities.
Although we have discretion in allocating most of our non-Medicare and non-Medicaid resources,
a portion is used for mandatory reviews, including financial statement audits conducted pursuant to the
Government Management Reform Act of 1994 (GMRA), § 405(b); the Chief Financial Officers Act of 1990
(CFO Act); and information systems reviews required by the Federal Information Security Management
Act of 2002 (FISMA).
The GMRA seeks to ensure that Federal managers have the financial information and flexibility necessary
to make sound policy decisions and manage scarce resources. The GMRA broadened the CFO Act by
requiring annual audited financial statements for all accounts and associated activities of HHS and other
Federal agencies and components of Federal agencies, including the Centers for Medicare & Medicaid
Services (CMS).
Acronyms and Abbreviations for Selected Terms Used in Part VII:
ACF—Administration for Children and Families
AICPA—American Institute of Certified Public Accountants
AIDS—acquired immunodeficiency syndrome
FAR—Federal Acquisition Regulation
OMB—Office of Management and Budget
PEPFAR—President’s Emergency Plan for AIDS Relief
Financial Statement Audits and Related Reviews
 Audit of fiscal year 2014 consolidated HHS financial statements and
financial-related reviews
Financial Statements. We will review the independent auditor’s workpapers to determine whether
financial statement audits of HHS and its components were conducted in accordance with Federal
requirements. Context—The purpose of a financial statement audit is to determine whether the
financial statements present fairly, in all material respects, the financial position of the audited entity
for the specified time period. (Chief Financial Officers Act of 1990, as amended by the Government
Management Reform Act of 1994; Government Auditing Standards; and OMB Bulletin 14-02, "Audit
Requirements for Federal Financial Statements.”) The audited consolidated FY 2014 financial
statements for the Department of Health and Human Services (HHS) are due to the Office of
Management and Budget (OMB) by November 17, 2014. The Audit Report on the HHS Special
Purpose Financial Statements entered into the Governmentwide Financial Report System is intended
to support the preparation of Governmentwide financial statements and reports. The report is
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prepared by the Independent Auditor who audits the HHS Consolidated Financial Statements. We
plan to perform a number of ancillary financial-related reviews related to the audit of the FY 2014
financial statements. The purpose of the financial-related reviews is to fulfill requirements in Office
of Management and Budget (OMB) Bulletin No. 14-02, §§ 6.1 through 13. (OAS; W-00-14-40009;
A 17-14-00001; A-17-14-00006; expected issue date: FY 2015; new start)
 Fiscal year 2014 Centers for Medicare & Medicaid Services’ financial
statements
Financial Statements. We will review the independent auditor’s workpapers to determine whether
the financial statement audit of the Centers for Medicare and Medicaid Services (CMS) was
conducted in accordance with Federal requirements. The purpose of a financial statement audit is to
determine whether the financial statements present fairly, in all material respects, the financial
position of the audited entity for the specified time period. (Chief Financial Officers Act of 1990, as
amended by the Government Management Reform Act of 1994; Government Auditing Standards;
and OMB Bulletin 14-02, "Audit Requirements for Federal Financial Statements.”)
(OAS; W-00-14-40008; A-17-14-02014; expected issue date: FY 2015; newe start)
Financial Reviews
 Compliance with improper payment reporting requirements
Payment Errors and Reporting. We will review certain aspects of HHS’s compliance with the
Improper Payments Information Act of 2002 (IPIA), as amended, regarding reporting improper
payments. We will also assess HHS’s compliance with the Improper Payment Elimination and
Recovery Act (IPERA) and the data presented in HHS’s Annual Financial Report (AFR) and provide
recommendations for modifying the reporting and addressing the goals of the reporting
requirements as needed. Context—Pursuant to the OMB Circular accompanying IPERA, OIG is
required to review how HHS is assessing the programs it reports as well as the accuracy and
completeness of the reporting in the AFR. IPERA requires the head of a Federal agency with
programs or activities that may be susceptible to significant improper payments to report to
Congress the agency’s estimate of improper payments. For any program or activity with estimated
improper payments exceeding $10 million, the agency must report to Congress the actions that the
agency is taking to reduce those payments. (OAS; W-00-12-40047; expected issue date: FY 2014;
work in progress)
 Evaluation of predictive analytics for reducing improper payments
Payment Errors and Reporting. HHS to implement over a 4-year period predictive analytics
technologies for reducing improper payments in Medicare fee-for-service. We will evaluate the
Department’s implementation of predictive analytics technologies and will assess HHS’s reporting of
actual and projected savings for improper payments avoided and recovered and the relative return
on investment and provide HHS any recommendations for modifying its methodology. We will also
assess the Department’s use of the technologies and determine whether improvements could be
made to increase Medicare savings. Context—HHS is required to report annually on the progress of
the programs and to certify certain amounts reported by the Department. (Small Business Jobs
Act of 2010.) (OAS; W-00-14-40060; various reviews; expected issue date: FY 2014; new start)
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 HHS contract management review
Contract Administration. We will review the controls the HHS Program Support Center has in place
to ensure compliance with requirements specified in appropriations statutes when awarding
contracts. We will review HHS’s quality assurance procedures to determine the accuracy and
completeness of the internal control reviews to ensure full compliance with appropriations laws.
Context—HHS, in its July 2011 Antideficiency Report to the President, noted that it implemented
corrective actions, including adopting quality assurance procedures and conducting procurement
management and internal control reviews to validate full compliance with appropriations laws and
regulations to ensure that there would be no future violations of the Anti-Deficiency Act. (31 U.S.C.
§ 1341(a)(1)) and Bona Fide Needs Rule. (31 U.S.C. § 1502).) (OAS; W-00-13-52313; expected issue
date: FY 2014; new start)
 HHS agencies’ annual accounting of drug-control funds
Compliance With Requirements. We will review HHS agencies’ compliance with the requirement
that agencies expending funds on National Drug Control Program activities submit to the Office of
National Drug Control Policy an annual accounting of the expenditure of such funds. (21 U.S.C.
§ 1704.) The policy also requires that an agency submit with its annual accounting an authentication
by the agency’s OIG in which OIG expresses a conclusion on the reliability of the agency’s assertions
in its accounting. We will submit this authentication with respect to HHS’s FY 2013 annual
accounting. (OAS; W-00-13-52312; various reviews; expected issue date: FY 2014; new start)
 The President’s Emergency Plan for AIDS Relief funds
Use of Funds. We will review the effectiveness of HHS’s accounting for and control of funds received
under The President’s Emergency Plan for AIDS Relief (PEPFAR) program. Context—HHS received
PEPFAR funds from the annual HHS appropriation and the Foreign Operations appropriation.
PEPFAR funds support international programs for AIDS prevention, treatment, and care. (OAS;
W-00-12-52300; W-00-13-52300; expected issue date: FY 2014; work in progress)
 OIG reviews of non-Federal audits
Compliance With Requirements. We will continue to review the quality of audits conducted by
non-Federal auditors, such as public accounting firms and State auditors, in accordance with OMB
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. As part of our
reviews of A-133 audits, we will also ensure that the auditors have audited and reported in
compliance with the American Recovery and Reinvestment Act of 2009 (Recovery Act). Context—
State, local, and Indian tribal governments; colleges and universities; and nonprofit organizations
receiving Federal awards are required to have annual organizationwide audits of all Federal funds
that they receive. Our reviews ensure that the audits and reports meet applicable standards,
identify any followup work needed, and identify issues that may require management attention.
OIG also provides upfront technical assistance to non-Federal auditors to ensure that they
understand Federal audit requirements and to promote effective audit work. We analyze and record
electronically the audit findings reported by non-Federal auditors for use by HHS managers.
Our reviews inform HHS managers about the management of Federal programs and identify
significant areas of internal control weaknesses, noncompliance with laws and regulations, and
questioned costs that require formal resolution by Federal officials. (OAS; W-00-00-0000; various
reviews; expected issue date: FY 2014; work in progress)
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 OIG reimbursable audits of non-HHS funds
Audits of Non-HHS Funds. We will conduct a series of audits as part of HHS’s cognizant-agency
responsibility under OMB Circular A-133, Audits of States, Local Governments, and Non-Profit
Organizations. Context—HHS OIG has audit cognizance over all State governments and most major
research colleges and universities that receive Federal funds. We enter into agreements with other
Federal audit organizations or other Federal agencies to reimburse us as the cognizant audit
organization for audits that we perform of non-HHS funds. To ensure a coordinated Federal
approach to audits of colleges, universities, and States, OMB establishes audit cognizance, that is, it
designates which Federal agency has primary responsibility for audit of all Federal funds the entity
receives. (OAS; W-00-13-50012; various reviews; expected issue date: FY 2013; new start)
 Requests for audit services
Throughout the year, Congress, HHS, and other Federal organizations request that we perform
a variety of financial-related audit services, including contract and grant closeouts, indirect cost
audits, bid proposal audits, and other reviews designed to provide specific information requested by
management. We evaluate requests as we receive them, considering such factors as why the audit is
being requested, how the results will be used, when the results are needed, and whether the work is
cost beneficial. (OAS; W-00-00-0000; various reviews; expected issue date: FY 2014; work in
progress)
Automated Information Systems
 HHS compliance with the Federal Information Security Management Act
of 2002
Information Security. We will review various HHS operating divisions’ compliance with the Federal
Information Security Management Act of 2002 (FISMA). Context—FISMA and OMB Circular A-130,
Management of Federal Information Resources, Appendix III, require that agencies and their
contractors maintain programs that provide adequate security for all information collected,
processed, transmitted, stored, or disseminated in general support systems and major applications.
(OAS; W-00-14-40016; W-00-13-42001; W-00-14-42001; various reviews; expected issue date:
FY 2014; new start)
 Information systems security audits
Information Security. We will determine the adequacy of information technology security general
controls of selected HHS systems to determine whether they are in compliance with FISMA and
directives issued by OMB and the National Institute of Standards and Technology.
(OAS; W-00-13-42002; W-00-14-42002; various reviews; expected issue date: FY 2014; work in
progress and new start)
 Penetration testing of hhs and opdiv networks (new)
Information Security. We will conduct network and Web application penetration testing to
determine HHS’s and its OPDIVs’ network security posture and determine whether these networks
and applications are susceptible to hackers. Context—Penetration tests are used to identify
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methods of gaining access to a system by using tools and techniques known to be employed by
hackers. There has been an increase in activity from computer hacker groups compromising
government systems and releasing sensitive data to the public or using such data to commit fraud.
OAS; W-00-13-42020; W-00-14-42020; various reviews; expected issue date: FY 2014; work in
progress and new start)
Other HHS-Related Issues
 HHS efforts to address grantee risks
Grants Management. We will determine how HHS awarding agencies mitigate grantee risks and
whether HHS awarding agencies receive and/or share information on grantees for which they have
concerns regarding performance expectations and/or accountability requirements. Context—HHS is
the largest grant-making agency in the Federal Government. In FY 2012, HHS awarded nearly
$347 billion in grants. Oversight of these funds is crucial to HHS's mission and to the health and
well-being of the public. Federal regulations incorporate uniform administrative requirements
governing HHS awards. Guidance in implementing those regulatory requirements is contained in the
HHS Grants Policy Directives, which apply across HHS. (OEI; 07-12-00110; expected issue date:
FY 2014; work in progress)
 HHS efforts to prevent the use of HHS grant funds for lobbying activities
Grants Management. We will determine the extent to which HHS agencies notify grantees of
lobbying prohibitions. We will also examine the extent to which HHS grantees are aware of lobbying
prohibitions. The review will also explore the extent to which HHS agencies have mechanisms in
place to identify and address lobbying violations. Context—The FY 2012 Consolidated
Appropriations Act, § 503, prohibits appropriations from being used for activities "designed to
influence the enactment of legislation, appropriations, regulation, administrative action, or Executive
order proposed or pending before the Congress or any State government, State legislature or local
legislature or legislative body…." Section 503 makes exceptions for activities "for normal and
recognized executive-legislative relationship or participation by an agency or officer of a State, local
or tribal government in policymaking and administrative processes within the executive branch of
that government." (OEI; 07-12-00620; expected issue date: FY 2014; work in progress)
 Hurricane Sandy—HHS internal controls for oversight of funds (new)
Use of Funds. We will assess the internal controls HHS has developed to provide stewardship over
Hurricane Sandy funds and determine whether those controls were suitably designed. We will
review the internal controls in place at the Department level and the top four Operating Divisions
(OPDIVs) that received Hurricane Sandy funding. Context—The Disaster Relief Appropriations Act of
2013 provided nearly $800 million to HHS in aid for Hurricane Sandy disaster victims and their
communities. OMB memorandum M-13-07, “Accountability for Funds Provided by the Disaster
Relief Appropriations Act,” provides that Federal agencies supporting recovery and other disasterrelated activities implement additional internal controls to prevent waste, fraud, and abuse. (OAS;
W-00-13-27130; W-02-13-02010; W-00-14-27130; expected issue date: FY 2014; work in progress)
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 Review of fiscal year 2012 conference expenditures (new)
Use of Funds. We will review the expenditures for conferences in a selected fiscal year to ensure
they were appropriate and reasonable and complied with Federal requirements. We will review the
conference planning and approval process, the process for awarding contracts and grants, and the
submission and approval of conference-related expenditures. Context—Audits performed by other
Federal departments have highlighted significant problems with the planning, approval, funding, and
holding of various Government conferences. Conference planning and spending guidance are found
in various Federal and HHS authorities (e.g., 41 CFR § 301–74, appropriations laws, acquisition
policies and procedures, OMB Memorandums M-12-12 and M-11-35, and travel regulations). (OAS;
W-00-13-52350; A-03-13-03003; W-00-14-52350; expected issue date: FY 2014; work in progress)
 HHS’s Government purchase, travel, and integrated charge card programs
(new)
Use of Funds. We will review HHS’s charge card programs (e.g., purchase, travel, or integrated cards)
to assess the risks of illegal, improper, or erroneous purchases. We will also determine the status of
HHS’s progress to implement previous travel and purchase card recommendations.
Context—OMB has instructed IGs to submit annual status reports on purchase and travel card audit
recommendations beginning January 31, 2014, for compilation and transmission to Congress and
GAO. Further, IGs are required to conduct periodic risk assessments of their agencies’ charge card
programs to analyze the risks of illegal, improper, or erroneous purchases. (Government Charge
Card Abuse Prevention Act of 2012 (Charge Card Act).) The Charge Card Act requires IGs to use the
risk assessments to determine the necessary scope, frequency, and number of IG audits or reviews
of the charge card programs. It requires Federal agencies, including HHS, to establish and maintain
safeguards and internal controls for purchase cards (including convenience checks), travel cards, and
integrated cards. HHS’s charge cards programs enable cardholders to pay for commercial goods,
services, and travel expenses. This risk assessment will determine the extent and focus of our
subsequent audit efforts. (OAS; W-00-14-59041; expected issue date: FY 2014; new start)
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Appendixes – Table of Contents
Page 73
Appendixes
Contents
Affordable Care Act Reviews ...........................................75
Health Insurance Marketplaces ................................................................................................ 75
Payment Accuracy....................................................................................................................................76
Eligibility Systems.....................................................................................................................................76
Contracts—Planning, Acquisition, Contracting, Management, and Performance...................................77
Security of Data and Consumer Information ...........................................................................................78
Medicaid Expansion and Other Medicaid Issues ...................................................................... 79
Medicaid Reviews ....................................................................................................................................79
Other Affordable Care Act Requirements and Programs ......................................................... 81
Medicare Reviews ....................................................................................................................................81
Other Programs .......................................................................................................................................82
Recovery Act Reviews .....................................................83
Medicare and Medicaid ............................................................................................................ 83
Adoption of Electronic Health Records ....................................................................................................83
Systems and Information Security ...........................................................................................................84
Cross-Cutting Enforcement Activities ....................................................................................... 85
Fraud and Whistleblower Reprisals .........................................................................................................85
HHS OIG Work Plan | FY 2014
Appendixes – Table of Contents
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http://oig.hhs.gov
HHS OIG Work Plan | FY 2014
Appendix A—Affordable Care Act Reviews
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Appendix A
Affordable Care Act Reviews
This appendix identifies work-in-progress and planned reviews for fiscal year (FY) 2014 related to the
Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education
Reconciliation Act of 2010 (Affordable Care Act). The Affordable Care Act enacted a range of new
programs affecting the Department of Health and Human Services (HHS) and made changes to existing
HHS programs. Provisions included, for example, establishing the new Health Insurance Marketplaces;
expansion of and changes to the Medicaid program; changes to several Parts of the Medicare program;
and new grant funding for other HHS programs and agencies such as the Health Resources and Services
Administration (HRSA) and the Centers for Disease Control and Prevention (CDC).
These programs and requirements are being implemented and operated in a rapidly changing and fluid
environment. 1 The Office of Inspector General (OIG) engages in a dynamic work planning process that
incorporates continuous risk assessment and prioritization of resources. OIG’s Affordable Care Act work
planning is informed by our assessment of potential vulnerabilities, input from stakeholders, and our
strategic goals to prevent fraud, waste, and abuse; promote value, safety, and quality; and secure the
future. We coordinate, as appropriate, with the Government Accountability Office (GAO) and other
Federal and State oversight agencies to foster economy, efficiency, and effectiveness of oversight efforts.
For FY 2014, our Affordable Care Act oversight focuses on operation of the new Health Insurance
Marketplaces and the expanding Medicaid program. This work will be supplemented in FY 2014 by
reviews examining the implementation of other Affordable Care Act programs and requirements,
including changes to the Medicare program.
Health Insurance Marketplaces
The Health Insurance Marketplaces (also known as the Affordable Insurance Exchanges or Health
Insurance Exchanges) include the Federally-Facilitated Marketplace (FFM or “Federal Marketplace”) and
State-Based Marketplaces (SBMs). Individuals use the Marketplaces to get information about their
health insurance options, be assessed for eligibility (for, among other things, qualified health plans,
premium tax credits, and cost sharing reductions), and enroll in the health plan of their choice.
OIG’s reviews will focus on ensuring that taxpayer funds are spent for their intended purposes and that
Marketplaces operate efficiently and effectively. OIG has prioritized four key areas for FY 2014:
•
•
•
•
1
Payment Accuracy
Eligibility Systems
Contracts—Planning, Acquisition, Contracting, Management, and Performance
Security of Data and Consumer Information
For OIG’s summary of challenges facing HHS in implementing the Affordable Care Act, please see “Top
Management Challenges” at https://oig.hhs.gov/reports-and-publications/top-challenges/2013/.
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Payment Accuracy
HHS must implement financial management and payment systems to ensure accurate and timely
payments to insurers of advance premium tax credits, cost-sharing reduction payments, and premium
stabilization payments. Insurers will begin receiving some types of payments in January 2014; other
types of payments begin later. Ongoing and planned FY 2014 work that is looking at payment accuracy
includes:
 Effectiveness of Internal Controls Over, and Validity of Payments For, Advanced Premium
Tax Credits and Cost Sharing Reductions (New)
Affordable Care Act, §§ 1401, 1402, 1411, 1412. We will determine the validity of payment amounts
and assess the effectiveness of HHS internal controls to pay Advanced Premium Tax Credit (APTC)
and Cost Sharing Reduction (CSR) subsidy amounts in accordance with federal requirements.
Payment amounts vary according to income, marital status, household composition, and eligibility
for government sponsored or employer sponsored health care coverage. This work will focus on the
temporary systems managed by HHS to make these payments. In a subsequent review, we plan to
examine the permanent processes and controls when they are established. (OAS; W-00-14-59018;
various reviews; expected issue date: FY 2014; work in progress)
 Oversight of Risk Corridor Program (New)
Affordable Care Act, § 1342. Under the temporary risk corridors program, qualified health plans
(QHPs) will establish target amounts based on premiums earned minus allowable costs. QHPs that
have lower than expected allowable costs must pay HHS if costs fall below 3 percent of their target
amount. Conversely, QHPs that have higher than expected allowable costs will receive payment if
costs exceed 3 percent of their target amount. The risk corridor program will use funds collected
from QHPs that have lower than expected costs and may use HHS funds to pay QHPs that have
higher than expected costs. OIG work previously identified problems with risk corridors established
during the transition to Medicare Part D (the program upon which § 1342 was based), raising
concerns that this new program could have similar vulnerabilities. We will assess CMS’s efforts to
ensure accurate reporting and payments in the risk corridors program. We will also examine
amounts paid under the program. (OEI; 00-00-00000; various reviews; expected issue date: FY2015;
new start)
In FY 2014, we plan to develop additional work examining CMS’s administration of payment systems,
which might include, for example, HHS’ role in the risk adjustment and reinsurance programs (§§
1341 and 1343); the calculation of subsidy payments for consumers whose circumstances change;
payments associated with individuals who move between Medicaid and insurance purchased
through a Marketplace; the treatment of subsidy payments when consumers terminate from or drop
coverage; and/or the accuracy of information received from State exchanges upon which Federal
payments are based.
Eligibility Systems
The FFM and SBMs must verify consumers’ personal information; accurately determine eligibility for
qualified health plans, tax credits, and cost-sharing reduction subsidies; and transmit complete,
accurate, and timely eligibility information to insurers and consumers. The Marketplaces must also
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Appendix A—Affordable Care Act Reviews
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facilitate Medicaid enrollment for those who qualify. (Reviews addressing Medicaid eligibility are
identified below in the "Medicaid Expansion and Other Medicaid Issues" section of this Appendix.) OIG’s
on-going and planned work to ensure the effectiveness and efficiency of eligibility systems includes:
 Review of Affordable Care Act Enrollment Safeguards (New)
Affordable Care Act, §1411. We will assess the effectiveness of internal controls in place to ensure
that accurate information is used by a marketplace to determine consumer eligibility for enrollment
and subsidy payments. The Continuing Appropriations Act (CAA) of 2014, Section 1001(c), requires
OIG to submit to the Congress by July 1, 2014, a report regarding the effectiveness of the procedures
and safeguards preventing the submission of inaccurate or fraudulent information by applicants for
enrollment in a qualified health plan (QHP). Initially, we plan to select the FFM and two SBMs for
internal control review. Using a statistically valid sample of applicants, we will review whether each
Marketplace has performed all the required verifications to determine eligibility for enrollment in a
QHP and for tax credits and cost sharing reductions, and has resolved any inconsistencies through
manual verification in accordance with regulations. We plan to expand our reviews to additional
SBMs in subsequent work. (OAS; W-00-14-42024; various reviews; expected issue date: FY 2014;
work in progress)
 Health Insurance Marketplaces’ Manual Verification Procedures (New)
Affordable Care Act, § 1411. We will determine how and to what extent health insurance
Marketplaces manually verify applicants’ eligibility to enroll in qualified health plans and their
eligibility for tax credits and cost sharing reductions. In some circumstances, information on a
consumer’s application cannot be verified electronically because data are unavailable or do not exist
or because the information on the application is inconsistent with data received. In most of these
cases, the Marketplace is required to request additional information or documentation. This
inspection of manual verification procedures will supplement OIG work mandated by Congress
under the CAA, § 201(c). (OEI; W-01-14-00180; expected issue date: FY 2014; work in progress)
Contracts—Planning, Acquisition, Contracting, Management, and
Performance
Contractors played, and will continue to play, a vital role in building, fixing, and maintaining the systems
that underpin the FFM authorized under the Affordable Care Act, § 1321. These systems are critical to
the operation of the FFM through HealthCare.gov and to allowing consumers to shop for and purchase
affordable health plans. HealthCare.gov is a CMS-managed Web site that hosts the FFM. For FY 2014,
OIG plans a comprehensive look at the Department’s efforts to implement and operate the FFM. This
body of work will include reviews of the planning, acquisition, contracting, contract management, and
contractor performance for the FFM. We anticipate covering timeframes both before and after
October 1, 2013, including existing and new contracts and contractors. On-going and planned work
presently includes:
 Implementation of the Federal Marketplace (New)
We will review the Department’s overall efforts in planning, coordinating, and implementing the
FFM. The difficulties encountered during the launch of the FFM on October 1, 2013, raised serious
concerns about the planning, management, and oversight of the FFM project. We will also review
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changes made after October 1, 2013. (OEI; 03-14-00280; various reviews; expected issue date:
FY 2015; work in progress)
 Procurement of the Federal Marketplace (New)
We will review HHS’s acquisition plans for the implementation of the FFM, including selection of
contractors and contract types and the rationale for these selections.
(OEI; 03-14-00230; expected issue date: FY 2014; work in progress)
 Reporting and Resolution of Problems During the Federal Marketplace Development
(New)
The review will determine the extent to which HHS and its contractors had mechanisms to
communicate problems or concerns about the FFM and whether they used those mechanisms
effectively. (OAS; W-00-14-59030; A-03-14-03001; expected issue date: FY 2014; work in progress).
 Payments to Federal Marketplace Contractors (New)
This review will examine HHS payments to contractors for work on the FFM. We plan to address key
questions, including whether performance-based contracting was used to determine payments to
contractors; whether contractors received incentive payments; whether contractor invoices met
requirements; and whether contractors were paid appropriately. (OAS; W-00-14-59030;
A-03-14-03001; expected issue date: FY 2014; work in progress).
 Oversight of Federal Marketplace Contractors (New)
This review will examine whether HHS exercised appropriate and adequate oversight and direction
over the contracts related to the FFM, whether HHS complied with oversight and monitoring
requirements required by Federal and HHS regulations, and whether contractors individually and as
a whole met requirements of their contracts, the acquisition plan, and the Affordable Care Act.
(OAS; W-00-14-59032; A-03-14-03003; expected issue date: FY 2015; work in progress)
Security of Data and Consumer Information
Effective operation of the Marketplaces requires rapid, accurate, and secure integration of data from
numerous Federal and State sources and individuals who use the Marketplaces. Because these systems
handle consumers’ sensitive personal information, security of data and systems is paramount. Reviews
currently underway and planned to address security in the Marketplaces include:
 CMS’s Implementation of Security Controls for the Federally Facilitated Exchange
HealthCare.gov (New)
We will determine whether information security controls for CMS’s Web infrastructure, which hosts
the FFM, have been implemented in accordance with CMS information security standards,
recognized industry best practices, and Federal information security standards. We will conduct a
vulnerability scan of the HealthCare.gov Web site using an automated tool that seeks to identify
known security vulnerabilities and discover possible methods of attack that can lead to unauthorized
access or the exfiltration of data. We will also review any reports related to prior vulnerability
assessments of Healthcare.gov, and assess whether the vulnerabilities identified were remediated
timely. (OAS, A-06-14-00023, various reviews, expected issue date: FY 2014; work in progress)
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 State-Based Marketplaces Information System Security Controls (New)
We will determine whether information security controls for SBMs have been implemented in
accordance with CMS guidelines, recognized industry best practices, and/or Federal information
security standards. We will conduct vulnerability scans of Web-based systems using automated tools
that seek to identify known security vulnerabilities and discover possible methods of attack that can
lead to unauthorized access or the exfiltration of data. We will also review any reports related to
prior vulnerability assessments of SBM systems, and assess whether the vulnerabilities identified
were remediated timely. (OAS, A-06-14-00000; various reviews; expected issue date: FY 2014; work
in progress)
Also, in coordination with other law enforcement partners, OIG is monitoring for reports of cybersecurity
threats and consumer fraud. OIG has promoted, and will continue to promote, consumer awareness
and prevention of fraud in the Marketplaces, including, for example, identity theft, imposter marketers,
and fake websites. Additional information about consumer protection can be found at:
http://oig.hhs.gov/fraud/consumer-alerts/index.asp.
Medicaid Expansion and Other Medicaid Issues
The Affordable Care Act is driving a significant expansion of the Medicaid program. Twenty-five states
and the District of Columbia are currently expanding coverage to include qualifying adults earning up to
133 percent of the Federal poverty level, pursuant to Affordable Care Act, § 2001. Enrollment in
Medicaid is increasing even in states that have not expanded eligibility, as previously eligible people
enroll through a Marketplace.
The Medicaid section of the Work Plan describes the range of FY 2014 reviews planned and in progress
to promote the effectiveness and efficiency of the growing Medicaid program. Focus areas include
prescription drugs; billing, payment, reimbursement, quality, and safety of home health services,
community-based care, and other services, equipment, and supplies; state management of Medicaid,
information system controls and security, and Medicaid managed care.
Medicaid Reviews
Reviews related directly to specific Affordable Care Act provisions include the following (these reviews
are described more fully in the Medicaid section of the Work Plan):
 Enhanced Federal Medical Assistance Percentage (New)
Affordable Care Act, § 2001. (OAS; W-00-14-31480; various reviews; expected issue date: FY 2015;
new start) Work Plan p. 42.
 Medicaid Eligibility Enrollment—National Error Rates (New)
Affordable Care Act, § 2001. (OEI; 00-00-0000; expected issue FY2015; new start; Affordable Care
Act) Work Plan p. 42.
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 Medicaid Eligibility Determinations in Selected States (New)
Affordable Care Act, § 2001. (OAS; W-00-14-31140; various reviews; expected issue date: FY 2015;
new start; Affordable Care Act) Work Plan p. 42.
 Rebates for New Formulations of Existing Drugs
Affordable Care Act, § 2501. (OAS; W-00-14-31451; various reviews; expected issue date: FY 2014;
new start) Work Plan p. 35.
 States’ Collection and Reporting of Rebates
Affordable Care Act, § 2501. (OEI; 03-12-00520; expected issue date: FY 2014; work in progress)
Work Plan p. 35.
 Health-Care-Acquired Conditions—Prohibition on Federal Reimbursements
Affordable Care Act, § 2702. (OAS; W-00-14-31452; various reviews; expected issue date: FY 2015;
new start) Work Plan p. 39.
 States’ Experiences with Enhanced Provider Screening
Affordable Care Act § 6402. (OEI; 05-13-00520; expected issue date: FY 2015; work in progress)
Work Plan p. 45.
 Provider Payment Suspensions during Pending Investigations of Credible Fraud
Allegations (New)
Affordable Care Act, § 6402(h)(2). (OAS; W-00-14-31473; various reviews; expected issue
date: FY 2015; new start; OEI; 09-14-00020; expected issue date: FY 2015; work in progress)
Work Plan p. 45.
 State Terminations of Providers Terminated by Medicare or by Other States
Affordable Care Act, § 6501. (OEI; 06-12-00030; expected issue date: FY 2014; work in progress)
Work Plan p. 44.
 Completeness and Accuracy of Managed Care Encounter Data
Affordable Care Act, § 6504. (OEI; 07-13-00120; expected issue date: FY 2015; work in progress)
Work Plan p. 48.
 National Correct Coding Initiative Edits and CMS Oversight (New)
Affordable Care Act, § 6507. (OAS; W-00-12-31459; various reviews; expected issue date: FY 2014;
work in progress; OEI; 00-00-0000; expected issue date: FY 2015; work in progress) Work Plan p. 47.
HHS OIG Work Plan | FY 2014
Appendix A—Affordable Care Act Reviews
Page 81
Other Affordable Care Act
Requirements and Programs
OIG’s portfolio of work related to the Affordable Care Act also includes reviews of changes to the
Medicare program and other new or changed programs.
Medicare Reviews
The Affordable Care Act introduced changes to the Medicare program designed to improve efficiency
and quality of care and promote program integrity and transparency. The Medicare sections of the
FY 2014 Work Plan describe OIG’s extensive body of on-going and planned reviews of all Parts of the
Medicare program. Much of this work will provide data and information on cost, quality, and delivery of
Medicare services that can aid the Department as it develops new, value-driven payment and delivery
models for the Medicare program, including those being implemented pursuant to the Affordable Care
Act.
The following reviews address specific Affordable Care Act provisions related to the Medicare program
and are described in more detail in the Medicare sections of the Work Plan:
 Hospice in Assisted Living Facilities (New)
Affordable Care Act, § 3132. (OEI; 02-14-00070; expected issue date: FY 2014; work in progress)
Work Plan p. 9.
 Quality of Sponsor Data Used in Calculating Coverage-Gap Discounts
Affordable Care Act,§ 3301. (OAS; W-00-14-35611; various reviews; expected issue date: FY 2015;
new start) Work Plan p. 32.
 Ensuring Dual Eligibles’ Access to Drugs Under Medicare Part D
Affordable Care Act,§ 3313. (OEI; 05-14-00170; expected issue date: FY 2014; work in progress)
Work Plan p. 32.
 Program for National Background Checks for Long-Term-Care Employees
Affordable Care Act, § 6201. (OEI; 07-10-00420; expected issue date: FY 2017; work in progress)
Work Plan p. 8.
 Enhanced Enrollment Screening Process for Medicare Providers
Affordable Care Act, § 6401. (OEI; 03-13-00050; expected issue date: FY 2014; work in progress)
Work Plan p. 27.
HHS OIG Work Plan | FY 2014
Appendix A—Affordable Care Act Reviews
Page 82
Other Programs
Planned work and work underway addressing other Affordable Care Act provisions include the following
reviews:
 Controls Over Pre-Existing Condition Insurance Plans
Affordable Care Act, § 1101. We will review the Federal and State controls designed to prevent,
detect, report, and recover fraud, waste, and abuse in the Pre-Existing Condition Insurance Plans
(PCIPs). We will also determine the extent to which CMS oversees such controls. The anticipated
high beneficiary care costs may have made PCIPs both attractive targets for fraudulent providers and
difficult programs for fraud detection. Lessons learned from the PCIP experience may inform efforts
to reduce fraud risks associated with coverage of high risk, high cost individuals. (OEI; 07-12-00300;
expected issue date: FY 2014; work in progress)
 Consumer Operated and Oriented Plan Loan Program—Eligibility Status and Use
of Startup and Solvency Loans (New)
Affordable Care Act, § 1322. We will follow up on prior OIG work that examined the selection
process for Consumer Operated and Oriented Plan (CO-OP) loans and identified factors that could
affect the CO-OP loan program, including startup funding levels. In this new work, we will verify
CO-OP eligibility status and the use of startup and solvency loans. (OAS; W-00-14-59019; various
reviews, expected issue date: FY 2015; new start)
 Prevention and Public Health Fund Grants—CDC Oversight (New)
Affordable Care Act, § 4002. We will assess the effectiveness of CDC’s management of the
Prevention and Public Health Fund (PPHF) program. We will also determine selected grantees’
compliance with grant requirements. Context—The Affordable Care Act established the PPHF
program to provide expanded and sustained national investments in prevention and public health, to
improve health outcomes, and to enhance health care quality. CDC received appropriations totaling
$1.26 billion during FY 2012 – 2013, representing 64 percent of total PPHF dollars. Recent legislation
may change CDC’s PPHF allotment. (OAS; W-00-14-59027; expected issue date: FY 2015; new start)
 HRSA—340B Covered Entity Access to 340B Ceiling Prices (New)
Affordable Care Act, § 7102. (OEI; 05-13-00510; expected issue date: FY 2014; work in progress)
Work Plan p. 59.
 Accuracy of the Physician Compare Web Site (New)
Affordable Care Act, § 10331. We will review CMS’s efforts to ensure that Physician Compare Web
site contains accurate information on healthcare providers. Context—The Affordable Care Act
required HHS to create the Physician Compare Web site, which is intended to help Medicare
beneficiaries make informed choices about their healthcare by providing them with information
about healthcare providers. (Affordable Care Act, § 10331.) To implement the provision, CMS
repurposed its Provider Enrollment, Chain, and Ownership System (PECOS) as its data source for
provider information on Physician Compare. However, prior OIG work identified that the provider
information in PECOS was often inaccurate and, at times, incomplete. (OEI; 01-14-00210; expected
issue date: FY 2015; new start)
HHS OIG Work Plan | FY 2014
Appendix B—Recovery Act Reviews
Page 83
Appendix B
Recovery Act Reviews
Pursuant to the American Recovery and Reinvestment Act of 2009 (Recovery Act), OIG received funding
for discretionary oversight of programs and operations of the Department of Health and Human Services
(HHS) that received supplemental funding through the Recovery Act. The funds have been used used
primarily to conduct financial oversight activities to ensure that HHS agencies and grantees used the
funds they received for the intended purposes and in accordance with established requirements.
Recovery Act funding resulted in a significant increase in the number of grants and contracts awarded by
HHS. The reviews that follow represent OIG’s continuing oversight of HHS agencies’ use of Recovery Act
funds.
Acronyms and Abbreviations for Selected Terms Used in the Medicare and Medicaid Section:
HIT—health information technology
PHI—protected health information
Medicare and Medicaid
Adoption of Electronic Health Records
An EHR is an electronic record of health-related information for an individual that is generated by health
care providers. It may include a patient’s health history, along with other items.
 Medicare Incentive Payments for Adopting Electronic Health Records
Electronic Health Records. We will review Medicare incentive payments to eligible health care
professionals and hospitals for adopting electronic health records (EHR) and the Centers for
Medicare & Medicaid Services (CMS) safeguards to prevent erroneous incentive payments. We will
review Medicare incentive payment data from 2011 to identify payments to providers that should
not have received incentive payments (e.g., those not meeting selected meaningful use criteria). We
will also assess CMS’s plans to oversee incentive payments for the duration of the program and
actions taken to remedy erroneous incentive payments. Context—Medicare incentive payments are
authorized over a 5-year period to physicians and hospitals that demonstrate meaningful use of
certified EHR technology. (Recovery Act, §§ 4101 and 4102.) Incentive payments were scheduled to
begin in 2011 and continue through 2016, with payment reductions to health care professionals who
fail to become meaningful users of EHRs beginning in 2015. (§ 4101(b).) According to Congressional
Budget Office (CBO) estimates, CMS’s net spending for incentives will total about $20 billion.
(OAS; W-00-13-31352; expected issue date: FY 2014; work in progress; Recovery Act)
HHS OIG Work Plan | FY 2014
Appendix B—Recovery Act Reviews
Page 84
 Medicaid Incentive Payments for Adopting Electronic Health Records
Electronic Health Records. We will review Medicaid incentive payments to Medicaid providers and
hospitals for adopting EHRs and CMS’s safeguards to prevent erroneous incentive payments. We will
determine whether incentive payments to Medicaid providers to purchase, implement, and operate
EHR technology were claimed in accordance with Medicaid requirements; assess CMS’s actions to
remedy erroneous incentive payments and its plans for securing the payments for the duration of
the incentive program; and determine whether payments to States for related administrative
expenses were appropriate. Context—The law authorizes 100 percent Federal financial participation
for allowable expenses for eligible Medicaid providers to purchase, implement, and operate certified
EHR technology. (Recovery Act § 4201.) The section also provides a 90-percent Federal match for
State administrative expenses for the adoption of certified EHR technology by Medicaid
providers. According to CBO estimates, Medicaid spending for EHR incentives will total about
$12 billion between 2011 and 2019. (OAS; W-00-12-31351; W-00-13-31351; various reviews;
expected issue date: FY 2014; work in progress; Recovery Act)
Systems and Information Security
 Security of Certified Electronic Health Record Technology under Meaningful Use (New)
Electronic Health Records. We will perform audits of various covered entities receiving EHR
incentive payments from CMS and their business associates, such as EHR cloud service providers, to
determine whether they adequately protect electronic health information created or maintained by
certified EHR technology. Context—A core meaningful-use objective for eligible providers and
hospitals is to protect electronic health information created or maintained by certified EHR
technology through the implementation of appropriate technical capabilities. To meet and measure
this objective, eligible hospitals, including critical access hospitals, must conduct a security risk
analysis of certified EHR technology as defined in Federal regulations and use the capabilities and
standards of Certified Electronic Health Record Technology (CEHRT). (45 CFR § 164.308(a)(1) and
45 CFR §§ 170.314(d)(1) – (d)(9).) Furthermore, business associates that transmit, process, and store
EHRs for Medicare/Medicaid providers are playing a larger role in the protection of electronic health
information. Therefore, audits of cloud service providers and other downstream service providers
are necessary to assure compliance with regulatory requirements and contractual agreements.
(OAS; W-04-14-42002; new start; various reviews; expected issue date: FY 2014; Recovery Act)
 OCR Oversight of Covered Entities' Compliance with the HIPAA Privacy Rule
Protected Health Information. We will review Office for Civil Rights (OCR) oversight of covered
entities’ compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
Privacy Rule. We will assess OCR’s oversight of covered entities’ compliance with the Privacy Rule
and determine the extent to which Medicare Part B covered entities are complying with selected
privacy standards. Context—The Privacy Rule establishes Federal minimum standards for
safeguarding individually identifiable protected health information (PHI). The Recovery Act requires
that OCR investigate all privacy complaints filed against covered entities if a preliminary investigation
indicates willful neglect of the Privacy Rule. Covered entities include health plans, health care
clearinghouses, and health care providers that electronically transmit health information in
connection with certain HIPAA transactions and technical standards. The Recovery Act also
strengthened OCR’s enforcement of the Privacy Rule by increasing the civil monetary penalties for
HHS OIG Work Plan | FY 2014
Appendix B—Recovery Act Reviews
Page 85
covered entities’ noncompliance. (74 Fed. Reg. 56123.) (OEI; 09-10-00510; expected issue date:
FY 2014; work in progress; Recovery Act)
 OCR Oversight of Covered Entities' Compliance with the HITECH Breach Notification Rule
Protected Health Information. We will review OCR’s oversight of covered entities' compliance with a
rule that requires that covered entities, as defined by HIPAA, notify affected individuals; the
Secretary of HHS; and when required, the media, following the discovery of a breach in unsecured
PHI. We will determine the extent to which OCR investigated breaches reported by covered entities
and determine the extent to which Medicare Part B covered entities complied with selected breach
standards. Context—A breach is the unauthorized acquisition, access, use, or disclosure of PHI that
compromises the security or privacy of such information. Unsecured PHI is individually identifiable
health information that is unencrypted or not destroyed in a way that renders the PHI unusable or
unreadable by unauthorized individuals. HHS provided additional guidance on what is considered to
be unsecured PHI in its issuances at 74 Fed. Reg. 19006 and 74 Fed. Reg. 42741. The Secretary of
HHS delegated oversight responsibility to OCR. (Heath Information Technology for Economic and
Clinical Health Act Breach Notification Rule.) (OEI; 09-10-00511; expected issue date: FY 2014; work
in progress; Recovery Act)
Cross-Cutting Enforcement Activities
OIG conducts criminal investigations of referrals of grant and contract fraud in the misuse of Recovery
Act funds and with regard to reprisals against whistleblowers.
Fraud and Whistleblower Reprisals
 Integrity of Recovery Act Expenditures
Criminal Investigations. We will evaluate credible allegations of improper expenditures of Recovery
Act funds to identify cases in which criminal investigations will be opened and enforcement actions
pursued. Context—Recovery Act funding resulted in a significant increase in the number of grants
and contracts awarded by the Department of Health and Human Services (HHS). Accordingly, we
expect an increase in the number of complaints and referrals of grant- and contract-related fraud
allegations. The Recovery Act requires transparency and accountability in the awarding and
spending of funds. (OI; various reviews; expected issue dates: FY 2009 through FY 2012; work in
progress; Recovery Act)
 Enforcement of Whistleblower Protections
Criminal Investigations. We will evaluate credible allegations of reprisals against whistleblowers by
entities or individuals receiving Recovery Act funds to identify cases in which criminal investigations
will be opened and antireprisal enforcement actions pursued. Context—The Recovery Act extends
whistleblower protection to employees who reasonably believe they are being retaliated against for
reporting misuse of Recovery Act funds received by their non-Federal employers. (Recovery Act,
§ 1553.) (OI; various reviews; expected issue dates: FY 2009 through FY 2012; work in progress;
Recovery Act)
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