Industry News

OIG Releases New Work Plan Items for January 2019.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently added six new Active Work Plan (Work Plan) items for January.  The Work Plan outlines ongoing and planned audits and evaluations for the fiscal year and beyond.  In 2017, the OIG began releasing its Work Plan projects on an ongoing basis, as opposed to providing biannual updates.  The monthly updates add new items and remove completed tasks from the Work Plan.  A monthly update schedule ensures that the Work Plan closely aligns with the OIG’s work planning process.

The OIG assesses relative risks in HHS programs and operations, to identify those areas most in need of attention.  The OIG considers several factors when creating Work Plan items, including legal mandates, congressional requests, budgetary concerns, and potential for positive impact.  In addition to working on projects that often lead to audits, reviews, and reports, the OIG also engages in several legal and investigative activities that are separately reported.

The January additions to the OIG Work Plan include the following:

Medicare Payments for Clinical Diagnostic Laboratory Tests in 2018: Year 1 of New Payment Rates

Medicare Part B covers most lab tests and 100 percent of allowable charges without charging beneficiaries copayments.  The Protecting Access to Medicare Act of 2014 (PAMA) mandates that the Centers for Medicare & Medicaid Services (CMS) release an annual analysis of the top 25 laboratory tests by expenditures.  PAMA also requires CMS to set payment rates for lab tests using current charges in the private health care market.  Medicare paid $7.1 billion for lab tests in 2017, which has been a steady rate from 2014 to 2017.  However, CMS began paying for lab tests under a new system mandated by PAMA beginning January 1, 2018, making this the first yearly expenditure report released under the new payment system.  The Office of Evaluations and Inspections (OEI) will report the top 25 laboratory test expenditures for 2018 made under the new payment system.

States’ Compliance with New Requirements to Prevent Medicaid Payments to Terminated Providers

The 21st Century Cures Act (the Act) requires CMS to provide all states with information on Medicaid providers that have been terminated for cause.  This requirement is intended to prevent terminated providers from treating Medicaid enrollees or receiving Medicaid payments.  The Act also mandates that the OEI conduct a study to examine the extent to which providers in CMS’s terminations database have been terminated from all state Medicaid programs.  The study is also required to examine the amount of Medicaid payments for items/services associated with terminated providers.  Additionally, the OEI study will examine the extent to which contracts between states and managed care entities include a provision that excludes terminated providers from all managed care networks.

Follow-up Review on Inpatient Claims Subject to the Post-Acute-Care Transfer Policy

Medicare pays the full Medicare Severity Diagnosis-Related Group (MS-DRG) payment to a hospital that discharges an inpatient beneficiary “to home.”  However, Medicare can pay a hospital a per diem rate under certain qualifying MS-DRGs if the hospital transfers an inpatient beneficiary to a post-acute care setting, under the post-acute-care transfer policy.   This payment is not to exceed the full MS-DRG payment that would have been made if the inpatient beneficiary had been discharged “to home.”  A prior OIG review found that hospitals did not comply with the Medicare post-acute-care transfer policy, resulting in overpayments by the Medicare program.  The OIG found that hospitals would use the “to home” patient discharge status codes on their claims even though the patient was transferred to a post-acute-care setting (i.e., home health services, skilled nursing facilities (SNF), and non-Inpatient Prospective Payment System (IPPS) hospitals or hospital units).  The prior OIG review also found that CMS’s common working file (CWF) edits related to beneficiary transfers to home health care, SNFs, and non-IPPS hospitals were not working properly.  The Office of Audit Services (OAS) will conduct this audit to determine if CMS corrected the CWF edits, ensure that the edits are working properly, and that CMS recovered the identified overpayments in accordance with policies and procedures.  The OIG recommended, and CMS agreed to, all corrective measures in the prior report.

Utilization and Pricing Trends for Naloxone in Medicaid

Naloxone is a medication designed to rapidly reverse opioid overdose.  The U.S. Surgeon General and CMS have stated that increasing access to naloxone is a top priority in response to the U.S. opioid epidemic.  Stakeholders have expressed concerns that the naloxone’s high cost may impede increased access to the drug.  However, Medicaid may play a significant role in addressing access issues because it covers nearly 40 percent of nonelderly adults with opioid addiction.  The OEI will produce a data brief that will first show trends in utilization of and expenditures for naloxone in Medicaid over a 5-year period.  The data brief will then determine how the cost-per-dose of naloxone under Medicaid compares to other available prices.  Finally, the OEI will determine the proportion of all naloxone distributed in the U.S. that was paid for under Medicaid between 2014 and 2018.  CMS hopes this information will help stakeholders determine how to increase cost-effective naloxone access to eligible Medicaid beneficiaries.

Medicare Outpatient Outlier Payments for Claims with Credits for Replaced Medical Devices

Hospitals are required to submit a zero or token charge when they receive a full credit for a replacement medical device.  However, CMS does not specify how to reduce charges for partial credits.  CMS makes an additional outpatient outlier payment for hospital outpatient services when a hospital’s charges, adjusted to cost, exceed a fixed multiple of the normal Medicare payment.  The OAS will conduct an audit to focus on overstated Medicare charges on outpatient claims that contain both an outlier payment and a reported medical device credit.  CMS hopes the review will determine if Medicare requirements were met for replaced medical devices and their respective outlier payments.

Duplicate Payments for Home Health Services Covered Under Medicare and Medicaid

Medicare Home Health Agency (HHA) coverage requirements state that HHAs are responsible for providing all services either directly or under arrangement while a beneficiary is under a physician authorized home health plan of care.  Medicare pays a single HHA overseeing the plan.  For dual eligible beneficiaries with no other coverage who are receiving HHA services, Medicare is the first payer, because Medicaid is generally a payer of last resort.  The OAS will conduct a review to determine whether states made Medicaid payments for HHA services provided to dual eligible beneficiaries who are also covered under Medicare.

The OIG Work Plan is available at: