The Department of Health and Human Services (HHS) released its FY 2013 budget for its various offices and sub-agencies, including the Office of the Inspector General (OIG).
OIG is an independent and objective oversight organization that promotes economy, efficiency, and effectiveness in the programs and operations of HHS. HHS consists of 11 operating divisions and the Office of the Secretary. The budget submission includes $370 million in furtherance of OIG’s mission in FY 2013, including:
$59 million, an increase of +$9 million above the FY 2012 Level for oversight of HHS’s more than 300 non-Medicare/Medicaid programs. These programs account for approximately $100 billion in spending and have grown significantly in size and scope during the last decade. The requested funds will enable OIG to target emerging priorities and to monitor the implementation of the Patient Protection and Affordable Care Act (ACA).
$311 million, an increase of +$5 million above the FY 2012 Level for Medicare and Medicaid oversight. This request will support the joint HHS and Department of Justice (DOJ) Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative and related program integrity efforts.
Background
Since the creation of the Health Care Fraud and Abuse Control (HCFAC) Program in 1997, approximately 80 percent of OIG’s annual funding and workload have been dedicated exclusively to oversight and enforcement activities with respect to health care fraud and abuse in the Medicare and Medicaid programs. All programs under HHS cover one in four Americans. The following laws provide the basis for these important OIG efforts:
– HIPAA: Established HCFAC under the direction of the Attorney General and the Secretary of HHS, acting through the Inspector General, to combat fraud, waste, and abuse in Medicare and Medicaid. HCFAC funding constitutes a major portion of OIG’s annual operating budget.
– The Deficit Reduction Act (DRA)
The President’s Budget proposes to increase the 2012 HCFAC Discretionary base funding to $311 million (which is fully offset) and to provide the additional $270 million in funding allowed by the cap adjustment, consistent with section 251(b)(2)(C) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. OIG’s allocation of these adjustments is displayed above. Provided OIG annual funding of $25 million in FYs 2006–2010 to undertake fraud and abuse control activities related to Medicaid.
Public Health, Human Services, and Department Oversight (+$8,496,000)
Ensuring oversight of HHS activities and key priority areas, such as grant oversight, including recommendations for suspensions and debarments, and monitoring ACA programs. Of the amount requested as an increase, $5,437,000 is requested to support 33 FTE that were previously supported with American Reinvestment and Recovery Act (Recovery Act) funding and to redirect their efforts towards emerging priorities.
CMS Oversight (+$5,452,000)
The specific focus of OIG’s oversight activities in FY 2013 will be determined through the annual work-planning process and the assessment of the top management and performance challenges facing HHS in FY 2013. The top management challenges from the most recent year will provide the foundation for OIG’s identification and assessment of priorities in future years. In developing the FY 2013 request, OIG has set the following goals and priorities:
- Sustaining the multiagency initiative to focus on preventing health care fraud and enforcing current antifraud laws around the country through the HEAT initiative and continuing to address a range of program integrity efforts, including reducing improper payments. While this funding is requested through the budget for CMS, information on OIG-specific activities can be found in this document.
- Protecting the integrity of Medicare and Medicaid beneficiaries.
- Assess program vulnerabilities and recommend actions to reduce improper payments and prevent fraud.
- Foster a culture of compliance within the health care industry both by issuing formal guidance and reaching out to other Federal and State agencies, stakeholder organizations, providers, and the public.
- Hold accountable perpetrators of Medicare and Medicaid fraud, with specific attention to combating organized crime and corporate fraud.
- Increase OIG’s capacity to effectively use data to target resources to areas with the greatest vulnerability.
- Protecting the integrity of HHS’s public health and human services programs Assess HHS operations and recommend actions to address program integrity vulnerabilities and improve program effectiveness.
- Provide HHS with vital information that will hold accountable grantees and contractors that manage large grant awards and contracts, and ensure the integrity of these significant expenditures.
- Increasing public confidence by providing innovation and responsible stewardship of HHS resources.
- Allocate resources on the basis of risk assessments and OIG and stakeholder priorities (e.g., quality of care, patient safety, the ACA, and the Recovery Act).
- Consistently deliver high-quality reports that are accurate, compelling, and relevant.
- Protect the confidentiality, integrity, and availability of information and systems.
As reported in OIG’s Fall 2011 Semiannual Report to Congress, OIG reported savings and expected recoveries of approximately $25.0 billion for FY 2011. This includes $19.8 billion from legislative and other cost-saving actions that were supported by recommendations in audits and evaluations, $4.6 billion in investigative receivables (which includes $0.9 billion in non-HHS investigative receivables resulting from OIG’s work in areas such as States’ share of Medicaid restitution), and $0.6 billion in audit receivables.
2011 OIG Accomplishments
Additionally, in FY 2011, OIG excluded 2,662 individuals and organizations from participation in Federal health care programs. Included in the FY 2011 exclusions were those based on convictions for crimes related to Medicare and Medicaid (1,105) or to other health care programs (233), patient abuse or neglect (206), or licensure revocations (897). Additionally, bases for exclusion include convictions for default on Health Education Assistance Loans. OIG reported:
- 723 criminal actions against individuals or organizations that engaged in crimes against HHS programs
- 382 civil and administrative enforcement actions, including False Claims Act and unjust enrichment suits filed in Federal district court,
- civil monetary penalties (CMP) law settlements involving more than $14.5 million in penalties and assessments, and administrative recoveries related to provider self-disclosure matters.
- The number of criminal, civil, and administrative actions represented an increase of more than 60 percent since FY 2007.
OIG often negotiates compliance obligations with providers and other entities as part of the settlement of investigations arising under a variety of civil and administrative false claims statutes. A provider or an entity consents to these obligations as part of the civil settlement and in exchange for OIG’s agreement not to seek the provider’s or the entity’s exclusion from participation in Federal health care programs. These agreements are known as corporate integrity agreements (CIAs) and typically last for 5 years.
OIG monitors entities’ compliance with these agreements and holds accountable those who violate them. Corporate integrity agreements generally include penalties for failure to meet certain terms, and OIG may exclude a provider who has committed a breach of its agreement. During FY 2011, OIG entered into 39 new such agreements and, at the close of the year, was monitoring compliance with 245 such agreements.
OIG work also prevents fraud and abuse through industry outreach and guidance and recommendations to remedy program vulnerabilities. As part of continuing efforts to promote the highest level of health care industry ethics and lawful conduct, OIG issues advisory opinions and other guidance to educate industry and other stakeholders on how to avoid fraud, waste, and abuse. This enables OIG to help industry navigate the complexities of the anti-kickback statute and safe harbor provisions and other OIG health care fraud and abuse sanctions. During FY 2011, OIG received 66 advisory opinion requests and, in consultation with DOJ, issued 22 advisory opinions.
OIG also develops materials and conducts training to assist in teaching about the Federal laws designed to protect the Medicare and Medicaid programs and beneficiaries from fraud, waste, and abuse. For example, during FY 2011, OIG conducted free compliance training for providers, compliance professionals, and attorneys through the HEAT Provider Compliance Training initiative.
The training included presenters from OIG, CMS, DOJ, and State Medicaid Fraud Control Units and was presented to over 700 in-person attendees in 6 cities. The final session in Washington, D.C., was Webcast live to over 2,000 participants. OIG developed comprehensive training materials to accompany the sessions, and those materials are now available online, together with 16 video modules dividing the Webcast by subject area. In 2011, the slides used during the training sessions were the second most downloaded item from OIG’s Website. In 2012, OIG has begun to expand on this effort by making these materials available via podcast. The online training will continue reaching the health care community with OIG’s message of compliance and prevention.
The FY 2013 request includes funding to support one Physician Comparability Allowance (PCA). The PCA helps to ensure that OIG has the specific expertise on a variety of medical and clinical issues relating to investigations, litigation, and compliance involving potential fraud, quality-of-care violations, and other significant health-care-related issues.
While the output of OIG’s efforts will be counted by the number of PHHS audits, evaluations, and investigations and enforcement actions, the outcome will be in actions to prevent or reduce fraud, waste, and abuse. Such deterrent effect is difficult to measure reliably and affordably, but it is demonstrated partially in expected recoveries, exclusions, enforcement actions, and the acceptance of OIG recommendations to improve economy and efficiency and promote effectiveness in HHS programs. In this regard, OIG recommendations provide HHS policymakers and senior officials with facts for making key policy decisions.
In 2011, 134 OIG recommendations were accepted by HHS program managers—recommendations that may result in significant improvements to the health and well-being of those served by HHS programs.
Improving the Transparency of Conflicts of Interest at CDC
In response to OIG’s report on the conflicts of interest among Special Government Employees (SGE), who often serve as subject matter experts on Federal advisory committees and play a role in public policy and decision making, the Centers for Disease Control and Prevention (CDC) addressed all of OIG’s recommendations. CDC now requires that all SGEs take ethics training and send written documentation of such.
In April 2010, CDC issued guidance on conflict-of- interest waivers. The guidance states that waivers must be granted before SGEs engage in a potentially prohibited activity, that waivers must be based upon a full disclosure by SGEs of all relevant facts, and that conflict-of-interest waivers must be issued in writing. Additionally, CDC now requires that all SGEs take ethics training and send written confirmation to CDC that they have done so. This report received the Award for Excellence in Government Ethics presented by the Council of the Inspectors General on Integrity and Efficiency (CIGIE).
Increasing Oversight of HHS Grants and Contracts
HHS is the largest grant-awarding agency in the Federal Government. In FY 2011, the Department awarded approximately $377 billion in grants, of which over $91 billion were for non-CMS programs. Management and oversight of these ever-changing grant programs is a top priority. This work will continue to take on increasing importance and urgency as more ACA grant dollars are awarded and expended. In addition, the Department, in FY 2011 alone, awarded over $19 billion in contracts across all program areas. The rapid growth of HHS grant expenditures and the scope and size of HHS contracts make the management of these funds a significant challenge.
The FY 2013 request will allow OIG to supplement its existing grant oversight work— both audits and evaluations—while placing greater emphasis on grant and procurement fraud investigations . Such efforts could lead to further enforcement actions or suspensions and debarments of HHS grantees and contractors, which would have a sentinel effect of preventing payments to non-responsible entities and individuals.
Furthermore, OIG will use funding from the FY 2013 request to extend efforts begun under the Recovery Act to other HHS programs. Under the Recovery Act, OIG began an approach to oversight that used significant preventive efforts to ensure that funding was appropriately used. OIG engaged in a series of recipient capability audits that required a pre-award assessment of financial position, organizational structure, financial systems, project execution, procurements, and property. With the information gathered, HHS policymakers and program officials can take actions to safeguard funds in near-real time to identify possible troubled grantees; offer additional technical assistance; and, in some cases, cancel grant awards. Possible next steps include using the results of risk assessments such as these to target high-risk grantees, programs, and contracts to determine whether Federal funds have been appropriately used.
Adverse Events in Hospitals
In a November 2010 report, OIG provided the first nationally representative rate of Medicare patients being harmed in hospitals as a result of an adverse event. OIG found that one in seven hospitalized Medicare beneficiaries (13.5 percent) experienced harm, such as a prolonged hospital stay, or death or required actions to prevent death. An additional 13.5 percent of Medicare patients experienced less severe or temporary problems, such as allergic reactions or injuries from a fall.
OIG determined that 44 percent of events were preventable and that adverse events resulted in additional hospital care, costing Medicare about $4.4 billion annually. CMS used these study results in designing the Administration’s 2011 Partnership for Patients, a $1 billion patient-safety initiative focused on reducing preventable patient harm.
Priority Unimplemented Recommendations–PHHS and CMS Oversight
OIG presents opportunities for additional cost savings and/or improvements in program efficiency and effectiveness in its yearly Compendium of Unimplemented Recommendations. OIG recommended the following:
- CDC: Improve States’ and localities’ medical and surgical preparedness for pandemics.
- FDA and NIH: Ensure that clinical investigators disclose all financial interests.
- NIH: Increase oversight of grantee institutions to ensure compliance with Federal financial conflict-of-interest regulations.
- IHS: Reduce overpayments for contract health services hospital claims and cap payments for nonhospital services at the Medicare rate for those services.
- Reduce the rental period for Medicare home oxygen equipment. Estimated savings: $3.2 billion.
- Modify payments to Medicare Advantage Organizations. Estimated savings: $1.97 billion.
- Ensure that Medicaid reimbursement for brand-name drugs accurately reflects pharmacy acquisition costs. Estimated savings: $1.08 billion.
- Establish connection between the calculation of Medicaid drug rebates and drug reimbursement. Estimated savings: $1 billion.
- Extend additional rebate payment provisions to generic drugs. Estimated savings: $966 million.
While OIG has not completed its formal work planning efforts for FY 2013, possible priorities for targeting its CMS oversight efforts include:
- Assessing program vulnerabilities and recommending actions to reduce improper payments and prevent fraud.
- Fostering a culture of compliance within the health care industry both by issuing formal guidance and reaching out to other Federal and State agencies, stakeholder organizations, providers, and the public.
- Holding accountable perpetrators of Medicare and Medicaid fraud, with specific attention to combating organized crime, criminal enterprise, and corporate fraud.
- Increasing OIG’s capacity to effectively use data to target resources to areas with the greatest vulnerability.