The Department of Health and Human Services (“HHS”) has released its annual Work Plan for FY2016 which summarizes new and ongoing Office of Inspector General (“OIG”) audits and reviews for HHS programs and operations. The Work Plan is a great resource for Medicare and Medicaid healthcare providers, suppliers and other healthcare government contractors to help identify internal areas of compliance on which to focus in the upcoming year. So what can we expect from HHS in 2016? OIG has focused its efforts on identifying ways to reduce improper payments, prevent fraud, and facilitate economical payment policies. These goals are hoped to be accomplished primarily through increased focus on Federal reporting and documentation requirements. Additional planning efforts for FY2016 will include: oversight of hospice care, Skilled Nursing Facilities’ (“SNF”) compliance with patient admission requirements and other activities the OIG plans to pursue related to evaluation of CMS’s Fraud Prevention System.
Medicare Part A and B Audit Practices and Activities
SNFs and home health agencies (“HHA”) should be aware of a new focus on compliance with the prospective payment system, especially relating to the documentation requirement in support of claims paid by Medicare. A prior OIG audit revealed that one in four HHAs had questionable billing practices. OIG also believes that Medicare payments to SNFs for therapy greatly exceed the costs to SNFs. Accordingly, OIG’s review in this area will focus on those situations where Medicare was billed at the highest level. In 2016, OIG wants to ensure that SNF and HHA claims are paid in accordance with Federal laws and regulations. Specifically, SNFs should make sure that all documentation requirements in 42 CFR § 483.20 are met to ensure that the care provided by SNFs is both reasonable and necessary. The documentation requirements include (1) a physician order at the time of admission for the resident’s immediate care (2) a comprehensive assessment, and (3) a comprehensive plan of care prepared by an interdisciplinary team that includes the attending physician, a registered nurse, and other appropriate staff. OIG is aware through prior investigations of certain specific areas at risk for noncompliance with these documentation requirements. Additionally, the Center for Medicare and Medicaid Services (“CMS”) has designated newly enrolling HHAs as high-risk providers. Since 2010, nearly $1 billion in improper Medicare payments and fraud has been identified relating to the home health benefit. Expect increased oversight and enforcement efforts in 2016.
Part A and Part B contractors also should be aware of new and continued oversight of contracts. Specifically, OIG will review administrative costs claimed by various contractors for their Medicare activities with a focus on costs claimed by terminated contractors. These reviews will focus on determining whether the costs claimed by contractors were reasonable, allocable and allowable. OIG plans to coordinate with CMS to determine which contractors will be reviewed. Criteria for review of costs include Appendix B of the Medicare contract with CMS and the FAR at 48 CFR Part 31. FAR Part 31 helps define which costs are reasonable, allocable and allowable. These determinations are usually fact-specific.
As also required under the FAR, OIG will calculate the total value of FAR contracts that CMS has not closed out and will seek to identify barriers to CMS managing and closing out FAR contracts. GAO has recently highlighted vulnerabilities and weaknesses in CMS’s contracting process, especially with regard to closing out contracts. OIG recognizes that given the number of contracts at CMS, timely and effective contract closeouts protect the government’s financial interests and allow for recovery of excess funds.
Additionally, among the audits to expect in 2016 is the Medicare costs associated with defective medical devices. OIG will review Medicare claims to identify the impact of additional medical services associated with defective medical devices on the safety and quality of care provided to beneficiaries, as well as the additional costs to Medicare of such additional services. CMS has expressed concern over the impact of the cost of replacement devices on Medicare payments. To the extent that there is an impact on the safety and quality of care provided to beneficiaries, OIG must determine a reasonable way of tracking services stemming from the recall of the medical devices in question.
Continuing on the subject of medical devices, one new addition to the 2016 Work Plan is an audit on payments made in connection with replaced medical devices. OIG will determine whether Medicare payments for replaced medical devices were made in accordance with Medicare requirements. Medical devices are replaced for a variety of reasons (defects, recalls, complications, etc.). Federal regulations require reductions in Medicare payments for replacement of implanted medical devices (See 42 CFR §§ 412.89 and 419.45). Prior OIG reviews have determined that Medicare Administrative Contractors have made improper payments with respect to replaced medical devices. So OIG has made 2016 a year to focus on identifying and eliminating such improper payments.
Other areas of focus for contractors include executive compensation charged to Medicare, contractor pension cost requirements, and contractor postretirement benefits and supplemental employee retirement plan costs.
Medicaid Audit Practices and Activities
While the Medicaid program continues to expand, protection from fraud, waste, and abuse takes on a heightened urgency. In FY2016, as with Medicare, companies dealing with Medicaid can expect to see an increased focus on reporting requirements. Specifically, OIG will determine manufacturer compliance with average manufacturing price (“AMP”) reporting requirements. These price reporting obligations 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). A previous OIG audit revealed that 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 reporting requirements. In 2016, OIG will seek to identify ways in which CMS can take action to improve compliance with these requirements.
This article previously appeared on Law360′s Government Contracts Section.
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