Under the Improper Payments Information Act of 2002, as amended, the Department of Health and Human Services (HHS) is required to annually report on improper payments and meet certain improvement metrics. In a report released last fall, HHS identified approximately $96.9 billion in gross improper payments in fiscal year (FY) 2016. $90 billion of this money were found to be overpayments.
On May 16, 2017, the HHS Office of Inspector General (OIG) released a report examining these improper payments to determine HHS’s compliance with the statute. In violation of the statute, the improper payment rates for both Medicare fee-for-service and Medicaid exceeded 10 percent in FY 2016. The OIG also found that HHS did not meet its improper payment reduction goals for the Medicare Advantage program and the Children’s Health Insurance Program (CHIP).
OIG Report
In the OIG findings, HHS largely agreed with what was reported. Working with Ernst & Young, it was determined HHS met many requirements but did not fully comply with IPIA. Among the items required for compliance with IPIA, EY determined HHS published the AFR for fiscal year (FY) 2016, conducted risk assessments for 22 programs deemed not susceptible to improper payments and determined the programs were not at risk for them, and published corrective action plans for 7 of the 8 programs OMB deemed susceptible to significant improper payments and all 5 programs deemed susceptible to significant improper payment under the Disaster Relief Appropriations Act (DRAA) (P.L. No. 113-2) that had not expended all funds by FY 2016.
EY concluded that HHS did not comply with several IPIA requirements. EY found HHS did not report an improper payment estimate for the Temporary Assistance for Needy Families program. EY also determined HHS did not achieve an improper payment rate of less than 10 percent for the Medicare Fee-for-Service and Medicaid programs; did not meet improper-payment-rate reduction targets for the Medicare Advantage program, the Children’s Health Insurance Program, and the Foster Care program; and did not conduct recovery audits for the Medicare Advantage program.
OIG Recommendations
According to the OIG, HHS has not fully addressed recommendations from the prior years’ OIG performance audits related to improper payments, including the need to provide an improper payment estimate and corrective action plan for TANF, meet certain improper payment rate reduction targets, and reduce improper payment rates to below 10%. Addressing these recommendations would improve HHS’s compliance with the IPIA, as amended, including compliance issues identified in the current findings.
Some of the recommendations include:
- HHS first focus on implementing an approach to reporting on TANF improper payment as this process will aid in identifying root causes of TANF improper payments. However, OIG recommends that HHS develop and publish corrective action plans after implementing an approach.
- OIG recommend that HHS and ACF continue working with states to (1) provide technical assistance and training related to policy updates and (2) support the Foster Care program in reaching its overall reduction goal target through appropriate implementation of corrective action plans at the state-level.
- OIG recommend HHS proactively take action throughout the fiscal year to achieve its established improper payment target rates. Medicare Advantage did not achieve the target rate mainly due to insufficient documentation by third parties, and therefore, OIG recommend, for example, that HHS continue to work with the Medicare Advantage plans and providers to communicate the documentation requirements and monitor the adherence to such requirements throughout the year.
- In addition, CHIP did not achieve its target rate in FY 2016 due to administrative or process errors made by the state or local agencies, and as a result, OIG recommend, for example, that HHS work with the states to bring their respective systems into compliance to implement new requirements.
- OIG recommend that HHS focus on the root causes for the improper payment rate percentage and evaluate critical and feasible action steps to decrease the improper payment rate percentage below 10%.
- OIG recommended that HHS focus on the root causes of the improper payment percentage and evaluate critical and feasible action steps to assist states with their compliance efforts for these new requirements.
- This would include working with the states to bring their respective systems into full compliance with new requirements to decrease the improper payment rate percentage below 10%. In addition, as HHS only reviews 17 states each year for the Medicaid improper payment rate, HHS should continue to follow up with states during the interim period to verify that corrective actions identified after the improper payment error rate measurement review are being implemented.
- OIG recommend that HHS actively search for RAC contractors for Medicare Advantage (Part C) and finalize the award in a timely manner with the intention to perform RAC audits in FY 2017.