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From Health Law Daily, April 7, 2014

FY 2013 Medicaid Integrity Program report issued

By Harold M. Bishop, JD

The HHS Office of Inspector General (OIG) has issued it Medicaid Integrity Program (MIP) report for fiscal year (FY) 2013. Many of the results summarized in the report reflect OIG oversight over multiple years that culminated in FY 2013. The OIG has organized its findings into the following categories: (1) information systems and data security; (2) state claims for the federal share of Medicaid; (3) recovery of the federal share of Medicaid overpayments; (4) Medicaid wasteful policies and practices; (5) beneficiary eligibility and access to care; and (6) legal and investigative activities. The following results were previously reported in OIG’s Semiannual Reports to Congress during FY 2013 (OIG Report, April 4, 2013).

Information systems and data security. The Medicaid Statistical Information System (MSIS) is Medicaid’s only nationwide Medicaid eligibility and claims database. The “transformed MSIS” (T-MSIS) is a continuation of past attempts by CMS to improve the MSIS. OIG’s September 2013 reportEarly Outcomes Show Limited Progress for the Transformed Medicaid Statistical Information System, raised concerns about states’ abilities to submit complete and accurate data to the T-MSIS. Evidence from OIG’s review indicates continued problems. The OIG recommends that CMS (1) establish a deadline for when national T-MSIS data will be available; (2) ensure that states submit required T-MSIS data; and (3) ensure that T-MSIS data are complete, accurate, and timely.

Recovery of the federal share of Medicaid overpayments. The OIG reports that as of December 2012, CMS had not collected $225.6 million of $1.2 billion in Medicaid overpayments to states that OIG had identified. The OIG recommends that CMS: (1) review and address delays in resolving OIG audit recommendations and promptly pursue corrective actions; (2) maintain adequate documentation to support the collection of overpayments in accordance with OMB Circular A-50 and CMS Standard Operating Procedures; (3) educate the states about their responsibility to report overpayments on the correct line of the CMS-64 to improve oversight of the reporting process; and (4) collect the remaining amount identified as due the federal government.

State claims for the federal share of Medicaid. OIG’s review focused on (1) federal and state requirements for payment and (2) state stewardship over policies and payments. Regarding federal and state requirements for payments, the OIG examined home health services, rehabilitative services, school-based transportation services, hospital outlier payments, personal care services, traumatic brain injury services, and assisted living facilities. The report makes numerous findings specific to various states regarding these categories.

The section on state stewardship over policies and payment describes gaps and vulnerabilities in states’ program oversight and management practices that inappropriately inflate state or federal costs of Medicaid. The report specifically examines Medicaid beneficiary identification numbers, cost allocation methodologies, unallowable administrative costs, improper rates and reporting errors, hospital eligibility issues, identification of excluded providers, and identification of third-party liability for payment. Again, the OIG makes numerous findings specific to various states regarding these areas of examination.

Medicaid wasteful policies and practices. The OIG found that with regard to payment for prescription drugs, that federal upper limit (FUL) amounts based on average manufacturer prices (AMPs) were 61 percent lower than FUL amounts based on published prices, e.g., average wholesale price (AWP) at the median. In addition, AMP-based FULs exceeded sampled pharmacy acquisition costs by 43 percent in the aggregate. The OIG recommended that: (1) CMS complete the implementation of the post-Affordable Care Act AMP-based FUL amounts for drug reimbursements and (2) that states reevaluate their Maximum Allowable Cost pricing programs for additional cost-saving opportunities.

The OIG also made recommendations to the following states with regard to waste found in payments for blood glucose test strips and other medical equipment and supplies:

  • New York should establish a competitive bidding program similar to that in the Medicare program for the purchase of test strips.

  • New Jersey should establish a competitive bidding program similar to that in the Medicare program for the purchase of test strips, reduce the Medicaid fee-for-service reimbursement rate for test strips to be comparable to the average retail price, or work with Medicaid Managed Care Organizations to adjust payment rates for test strips to the average retail price or to Medicare competitive payment rates.

  • Illinois should lower the net cost of test strips through changes to its provider reimbursement rates.

  • Ohio should establish competitive bidding that functions similar to Medicare’s Competitive Bidding Program for the purchase of selected durable medical equipment and supply items.

  • In Texas, further analysis is needed to better understand the full potential of limiting federal reimbursement for state Medicaid spending on medical equipment and supplies to Medicare payment rates.

Beneficiary eligibility and access to care. The OIG identified 11 states with policies in their Medicaid state plans or other written policy documents that improperly restrict eligibility for the mandatory home health benefit to homebound individuals: Alabama, Arkansas, Indiana, Montana, Nebraska, New Mexico, North Dakota, Pennsylvania, South Dakota, Utah, and West Virginia.

In July 2000, CMS released a State Medicaid Director letter stating that although Medicare requires beneficiaries to be homebound to qualify for home health services, imposing a homebound requirement on Medicaid home health benefits violates CMS’s interpretation of Medicaid regulations related to “amount, duration, and scope of services” and “comparability of services.” In July 2011, CMS published a Notice of Proposed Rulemaking to codify its interpretation, but it remains to be implemented (76 FR 41032, 41033, and 41038).

The OIG encourages CMS to finalize this regulation, after which it could consider issuing guidance specific to home health services and homebound eligibility restrictions, explaining why such restrictions are improper.

Legal and investigative activities. The OIG reports that in FY 2013, combined federal and state expenditures for the operation of 50 Medicaid Fraud Control Units (MFCUs) totaled about $231.5 million. Collectively, in FY 2013, MFCUs reported 15,590 investigations, of which 12,366 were related to Medicaid fraud and 3,224 were related to patient abuse and neglect, including misappropriation of patients’ private funds. The cases resulted in criminal charges against or indictments of 1,588 individuals, including 1,197 for fraud and 391 for patient abuse and neglect, including patient funds cases. In total, 1,341 criminal actions were reported in FY 2013, of which 991 were related to Medicaid fraud and 350 were related to patient abuse and neglect, including patient funds cases. Civil judgments and settlements for FY 2013 totaled 879 and monetary recoveries in civil cases totaled over $1.5 billion. This information is contained in the MRCU FY 2013 Annual Report.

MainStory: TopStory ProgramIntegrityNews CMSNews AuditNews EnforcementNews FraudNews HealthReformNews HomeNews DMENews DrugBiologicalNews ManagedCareNews MedicaidNews MedicaidPaymentNews

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