Inspector General Releases Medicare Investigation Targets for Next 12 Months

The Office of Inspector General  of the U.S. Department of Health and Human Services released its plan of work for Fiscal 2013, which began Oct. 1, and introduced many new areas of inquiry within Medicare and Medicaid.

The full year’s program of work, which tips the scales at 148 pages (and can be downloaded here), promises 50 new investigations into a wide range of Medicare/Medicaid reimbursed services and practices, including MS-DRG coding, hospital transfers and swing beds, and highly advertised services such as diabetes testing devices and powered chairs.

What follows is a list and description of all the new investigations planned for Fiscal 2013:

Hospitals—Inpatient Billing for Medicare Beneficiaries (New) 

We will describe how hospital billing for inpatient stays changed from FY 2008 to FY 2012.  We will also describe how billing for inpatient stays in FY 2012 varied among different types of hospitals and how hospitals ensure compliance with Medicare requirements for inpatient billing.  In 2010, Medicare paid hospitals $100 billion for inpatient stays.  Most hospitals are paid under the inpatient prospective payment system (IPPS), which CMS changed substantially in FY 2008.  Under the IPPS, each inpatient stay is classified into one of 747 Medicare severity diagnosis related groups (MS-DRG) based on the beneficiary’s diagnoses and the procedures the hospital performed, as well as other factors.  Medicare pays hospitals a different amount for each MS-DRG.  (OEI; 02-10-00100; expected issue date:  FY 2013; work in progress)

Hospitals—Diagnosis Related Group Window (New)

We will analyze claims data to determine how much CMS could save if it bundled outpatient services delivered up to 14 days prior to an inpatient hospital admission into the diagnosis related group (DRG) payment.  Medicare currently bundles all outpatient services delivered 3 days prior to an inpatient hospital admission.  (Social Security Act, § 1886(a)(4).)  Medicare does not pay separately for such preadmission services when they are delivered in a setting owned or operated by the admitting hospital.  This policy is commonly known as the “DRG window.”  Prior OIG work identified improper payments in the DRG window.  OIG work has also concluded that CMS could realize significant savings if the DRG window was expanded from 3 days to 14 days.  (OEI; 05-12-00480; expected issue date:  FY 2013; work in progress)

Hospitals—Non-Hospital-Owned Physician Practices Using Provider-Based Status (New)

We will determine the impact  of non-hospital-owned physician practices billing Medicare as provider-based physician practices.  We will also determine the extent to which practices using the provider-based status  met CMS billing requirements.  Provider-based status allows a subordinate facility to bill as part of the main provider.  Provider-based status can result in additional Medicare payments for services furnished at provider-based facilities and may also increase beneficiaries’ coinsurance liabilities.  In 2011, the Medicare Payment Advisory Commission (MedPAC) expressed concerns about the financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services.  (OEI; 04-12-00380; 04-12-00381; expected issue date:  FY 2013; work in progress)

Hospitals—Compliance With Medicare’s Transfer Policy (New)

We will review Medicare payments made to hospitals for beneficiary discharges that should have been coded as transfers.  We will determine whether such claims were appropriately processed and paid.  We will also review the effectiveness of the MAC’s claims processing edits used to identify claims subject to the transfer policy.  Pursuant to Federal regulations, a hospital discharging a beneficiary is paid the full DRG amount.  (42 CFR § 412.4 (e).)  In contrast, a hospital that transfers a beneficiary to another facility is paid a graduated per diem rate, not to exceed the full DRG payment that would have been made if the beneficiary had been discharged without being transferred.  (42 CFR§ 412.4(f).)  (OAS; W-00-12-35102; various reviews; expected issue date: FY 2013; work in progress)

Hospitals—Payments for Discharges to Swing Beds in Other Hospitals (New) 

We will review Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital.  Swing beds are inpatient beds that can be used interchangeably for either acute care or skilled nursing services.  Pursuant to Federal regulations, a hospital discharging a beneficiary is paid the full DRG amount.  (42 CFR § 412.4 (e).)  In contrast, Medicare pays hospitals a reduced payment for shorter lengths of stay when beneficiaries are transferred to another prospective payment system (PPS) hospital (42 CFR § 412.4(f).)  This is based on the assumption that acute care hospitals should not receive full DRG payments for beneficiaries discharged “early” and then admitted to additional care in other clinical settings.  However, Medicare does not pay the reduced graduated per diem rate if that patient was discharged to a swing bed in another hospital.  If appropriate, we will recommend that CMS evaluate its policy related to payment for hospital discharges to swing beds in other hospitals.  (OAS; W-00-13-35700; various reviews; expected issue date: FY 2013; new start)

Hospitals—Payments for Canceled Surgical Procedures (New)

We will determine costs incurred by Medicare related to inpatient hospital claims for canceled surgical procedures.  Our preliminary analysis of Medicare claims data for inpatient stays demonstrated significant occurrences of an initial PPS payment to hospitals for a canceled surgical procedure followed by a second, higher PPS payment to the same hospitals for the rescheduled surgical procedure.  For these claims, the canceled surgical procedure was the principal reason for the initial hospital admission.  For these short-stay claims, few, if any, inpatient services (i.e., laboratory or diagnostic tests) were provided by the hospitals because the surgical procedure was canceled.  Medicare makes two payments to hospitals that generate two bills unless the patient is readmitted to the hospital on the same day, in which case a single payment is made.  Our analysis also identified inpatient claims with canceled surgical procedures for stays of less than 2 days that were not followed by subsequent inpatient admissions to the same hospitals for the rescheduled surgical procedures.  Current Medicare policy does not preclude payment for these claims.  (OAS; W-00-13-35626; various reviews; expected issue date: FY 2013; new start)

 Hospitals—Payments for Mechanical Ventilation (New)

We will review Medicare payments for mechanical ventilation to determine whether the DRG assignments and resultant payments were appropriate.  We will review selected Medicare payments to determine whether patients received fewer than 96 hours of mechanical ventilation.  Mechanical ventilation is the use of a ventilator or respirator to take over active breathing for a patient.  CMS requires that claims be completed accurately to be processed correctly and promptly.  (Medicare Claims Processing Manual, Pub. No. 100-04, ch. 1, § 80.3.2.2.)  For certain DRG payments to qualify for Medicare coverage, a patient must receive 96 or more hours of mechanical ventilation.  (OAS; W-00-12-35575; various reviews; expected issue date: FY 2013; work in progress)

Hospitals—Quality Improvement Organizations’ Work With Hospitals (New) 

We will determine the extent to which Quality Improvement Organizations (QIO) worked with hospitals either to conduct quality improvement projects or to provide technical assistance.  We will also assess the barriers QIOs experience when engaging hospitals.  CMS is required to enter into contracts with QIOs, formerly called utilization and quality control peer review organizations.  (Social Security Act § 1862 (g).) The purpose of the QIOs is to improve the efficiency, effectiveness, economy, and quality of services delivered to Medicare beneficiaries.  Medicare spends about $1.1 billion for each 3-year QIO contract period, and each contract calls for QIOs to provide technical assistance to providers and specifies clinical areas for the quality improvement projects.  (OEI; 01-12-00650; expected issue date:  FY 2014; work in progress)

Hospitals—Acquisitions of Ambulatory Surgical Centers:  Impact on Medicare Spending (New)

We will determine the extent to which hospitals acquire ASCs and convert them to hospital outpatient departments.  We will also determine the effect of such acquisitions on Medicare payments andbeneficiary cost sharing.  Medicare reimburses outpatient surgical services performed in hospital outpatient departments at a higher rate than similar services performed in ASCs.  Hospitals may be acquiring ASCs and providing outpatient surgical services in that setting.  (OEI; 06-12-00590; expected issue date:  FY 2014; work in progress)

Critical Access Hospitals—Payments for Swing-Bed Services (New) 

We will compare reimbursement for swing-bed services at CAHs to the same level of care obtained at traditional skilled nursing facilities (SNF) to determine whether Medicare could achieve cost savings through a more cost effective payment methodology.  Swing beds are inpatient beds that can be used interchangeably for either acute care or skilled nursing services.  The Balanced Budget Act of 1997 (BBA) created the CAH Program to ensure access to health care services in rural areas.  The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) allowed CAHs to receive Medicare reimbursement equal to 101 percent of reasonable cost and have up to 25 inpatient beds that could be used for acute care or swing-bed services, with CMS approval.  (Social Security Act, § 1814(l).)  Neither the BBA nor the MMA established any length-of-stay limits for swing-bed utilization.  Unlike CAHs, traditional SNFs are reimbursed under a PPS through case-mix, adjusted per-diem prospective payment rates for all SNFs.  The payment rates represent payment in full for all costs associated with furnishing covered SNF services to Medicare beneficiaries.  (OAS; W-00-12-35101; various reviews; expected issue date: FY 2013; work in progress)

Long -Term-Care Hospitals—Payments for Interrupted Stays (New)

We will determine the extent to which Medicare made improper payments for interrupted stays in long-term -care hospitals (LTCH) in 2011.  We will also identify readmission patterns and determine the extent to which LTCHs readmit patients directly following the interrupted stay periods.  LTCHs are generally defined as inpatient acute care hospitals with an average length of stay greater than 25 days.  An interrupted stay occurs when a patient is discharged from an LTCH for treatment and services that are not available at the LTCH and is readmitted after a specific number of days.  Interrupted stays in LTCHs cause an adjustment in Medicare payments.  (42 CFR § 412.531.)  Prior OIG work has identified vulnerabilities in CMS’s ability to detect readmissions and appropriately pay for interrupted stays.  (OEI; 04-12-00490; expected issue date:  FY 2014;  work in progress)

Nursing Homes—State Agency Verification of Deficiency Corrections (New)

We will determine whether State survey agencies verified correction plans for deficiencies identified during nursing home recertification surveys.  Federal regulations require nursing homes to submit correction plans to the State survey agency or CMS for deficiencies identified during surveys.  (42 CFR § 488.402(d).)  CMS requires State survey agencies to verify the correction of identified deficiencies through onsite reviews or by obtaining other evidence of correction.  (State Operations Manual,  Pub. No. 100-07, § 7300.3.)  A prior OIG review found that one State survey agency did not always verify that nursing homes corrected deficiencies identified during surveys in accordance with Federal requirements.  (OAS; W-00-13-35701; various reviews; expected issue date: FY 2013; new start)

 Nursing Homes—Use of Atypical Antipsychotic Drugs (New) 

We will assess nursing homes’ administration of atypical antipsychotic drugs, including the percentage of residents receiving these drugs and the types of drugs most commonly received.  We will also describe the characteristics associated with nursing homes that frequently administer  atypical antipsychotic drugs.  According to 42 CFR § 488.3,  nursing homes must comply with Federal quality and safety standards, including requiring the monitoring of the prescription drugs prescribed to its residents. Federal requirements, 42 CFR § 483.25(l)(1), also require that nursing home residents’ drug regimens be free from unnecessary drugs.  (OEI; 00-00-00000; expected issue date:  FY 2014; new start)

Nursing Homes—Oversight of the Minimum Data Set Submitted by Long-Term-Care Facilities (New) 

We will determine whether and the extent to which CMS and the States oversee the accuracy and completeness of Minimum Data Set (MDS) data submitted by nursing facilities.  Certified nursing facilities are required to complete the MDS for all residents at specified intervals and submit data electronically to the State.  States then submit data to CMS, which uses it for a number of programs, including payment, quality monitoring, and consumer information.  (OEI; 06-12-00440; expected issue dates:  FY 2014; work in progress)

Home Health Agencies —Home Health Face-to-Face Requirement (New)

We will determine the extent to which home health agencies (HHA) are complying with a statutory requirement that physicians (or certain practitioners working with physicians) who certify beneficiaries as eligible for Medicare home health services have face-to-face encounters with the beneficiaries.  (Patient Protection and Affordable Care Act (Affordable Care Act), § 6407.)  The encounters must occur within 120 days:  either within the 90 days before beneficiaries start home health care or up to 30 days after care begins.  (42 CFR § 424.22.)  OIG work conducted before the Affordable Care Act mandate went into effect found that only 30 percent of beneficiaries had at least one face-to-face visit with the physicians who ordered their home health care.  (OEI; 01-12-00390; expected issue date:  FY 2013; work in progress.  Affordable Care Act.)

HHAs—Employment of Home Health Aides With Criminal Convictions (New)

We will determine the extent to which HHAs are complying with State requirements that criminal background checks be conducted with respect to HHA applicants and employees.  Federal law requires that HHAs comply with all applicable State and local laws and regulations.  (Social Security Act, §1891(a)(5), implemented at 42 CFR § 484.12(a).)  A previous OIG review found that 92 percent of nursing homes employed at least one individual with at least one criminal conviction; however, this review could not determine whether the nursing home employees were disqualified from working in nursing homes because OIG did not have access to detailed information on the nature of the employees’ crimes.  Nearly all States have laws prohibiting certain care-related entities from employing individuals with prohibited criminal convictions. (OEI; 12-12-00630; expected issued date:  FY 2013; work in progress)

Quality Standards—Accreditation of Medical Equipment Suppliers (New)

This review will examine accreditation organizations’ (AO) requirements and processes for granting accreditation to ensure that medical equipment suppliers meet each of Medicare’s quality standards.  Failure to meet quality standards could pose a threat to beneficiary safety and quality of care as well as place Medicare resources at risk.  Medical equipment suppliers must become accredited by a CMS-approved AO and must comply with quality standards to maintain their billing privileges.  CMS oversees AOs through validation surveys.  This review will also evaluate CMS’s procedures for conducting validation surveys.  Such surveys help CMS determine whether an AO’s accreditation procedures are adequately ensuring that suppliers are complying with Medicare’s quality standards.  (OEI; 00-00-00000; expected issue date:  FY 2014; new start)

Lower Limb Prostheses—Supplier Compliance With Payment Requirements (New)

We will review Medicare Part B payments for claims submitted by medical equipment suppliers for lower limb prosthetics to determine whether the requirements of CMS’s  Benefits Policy Manual, Pub. 100-02, ch. 15, § 120, were met.  Payments to service providers are precluded unless the provider has and furnishes upon request the information necessary to determine the amounts due.  (Social Security Act, §1833(e).)  Medicare does not pay for items or services that are “not reasonable and necessary.”  (Social Security Act, § 1862(a)(1)(A).)  OIG conducted a national review of suppliers of lower limb prosthetics and identified 267 suppliers that had questionable billings.  Prior OIG work found that suppliers frequently submitted claims that did not meet certain Medicare requirements; were for beneficiaries with no claims from their referring physicians; and had other questionable billing characteristics (e.g., billing lower limb prostheses for a high percentage of beneficiaries with no history of an amputation or missing limb).  Such claims are improper and should not be paid by Medicare.  (OAS; W-00-13-35702; various reviews; expected issue date: FY 2013; new start)

 Power Mobility Devices—Supplier Compliance With Payment Requirements (New)

We will conduct a series of reviews related to power mobility devices (PMD).  The reviews will focus on whether Medicare payments for PMD claims submitted by medical equipment suppliers were made in accordance with requirements at 42 CFR § 410.38(c)(2).  Medicare does not pay for items or services that are “not reasonable and necessary.”  We will also determine whether savings can be achieved by Medicare for PMDs that are not affected by the Affordable Care Act, § 3136, which eliminated the option of a lump-sum purchase for certain PMDs.  Prior to the enactment of the Affordable Care Act, a beneficiary was given the option to make a “lump sum” purchase of a power-driven wheelchair at the time it was furnished instead of renting it.  (OAS; W-00-13-35703; various reviews; expected issue date: FY 2013; new start.  Affordable Care Act.)

Vacuum Erection Systems—Reasonableness of Medicare’s Fee Schedule Amounts Compared to Amounts Paid by Other Payers (New)

Our review will determine the reasonableness of the Medicare fee schedule amount for Vacuum Erection Systems (VES).  We will compare Medicare payments made for VES to the amounts paid by non-Medicare payers, such as private insurance companies and the Department of Veterans Affairs (VA), to identify potentially wasteful spending.  We will estimate the financial impact on the Medicare program and on beneficiaries of aligning the fee schedule payments for VESs with those of non-Medicare payers.  (OAS; W-00-13-35705; various reviews; expected issue date: FY 2013; new start)

Continuous Positive Airway Pressure Supplies—Reasonableness of Medicare’s Replacement of Supplies Compared to That of Other Federal Programs (New)

We will determine the extent to which Medicare’s supply replacement schedules for supplies related to continuous positive airway pressure (CPAP) machines (equipment used to treat obstructive sleep apnea) vary from those of Medicaid, VA, and Federal Employees Health Benefits programs.  We will also identify savings that might be achieved by adopting alternative schedules to avoid wasteful spending.  Medicare Part B covers medical equipment and the services and supplies that are essential to its effective use . Separate charges for replacement supplies, such as masks, tubing, and filters, are covered if a beneficiary either rents or owns a CPAP machine.  There are no national coverage determinations for the frequency of replacement of CPAP supplies; rather, this is at the discretion of designated Medicare payment contractors.  The contractors have established identical CPAP supply replacement schedules. (OEI; 07-12-00250; expected issue date:  FY 2013; work in progress)

Diabetes Testing Supplies—Improper Supplier Billing for Test Strips in Competitive Bidding Areas (New)

We will determine the extent to which suppliers improperly billed Medicare non-mail-order diabetes test strips in Competitive Bidding Areas (CBA) in 2011.  We will also describe billing trends for test strips in CBAs between 2010 and 2011 and the extent to which suppliers conducted activities that we determined to be inappropriate (i.e., waiving copayments, contacting beneficiaries, sending unsolicited test strips in 2010 or 2011.  There is concern that suppliers may be undermining the Competitive Bidding Program by billing for non-mail order test strips that are actually provided via mail order to receive a higher reimbursement amount and/or may be providing incentives to beneficiaries to receive test strips via non-mail order rather than via mail order, such as by waiving Medicare Part B copayments for beneficiaries.  In 2011, the Competitive Bidding Program started in nine CBAs, resulting in lower reimbursement rates for mail-order test strips than for non-mail-order test strips.  (OEI; 04-11-00760; expected issue date:  FY 2013; work in progress)

Diabetes Testing Supplies—Supplier Compliance With Requirements for Non-Mail-Order Claims (New)

We will determine whether Part B payments for non-mail-order diabetes testing supplies (e.g., supplies purchased from suppliers that have physical locations) were made in accordance with Medicare requirements.  Federal law required a 9.5-percent reduction in fee schedule payments for certain items included in Round 1 of the Durable Medicare Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program, including diabetic testing supplies delivered by mail.  (Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), § 154(a)(2).)  The reduction applied to items provided on or after January 1, 2009, in any geographical area.  Suppliers are required to use the service code “KL” modifier on claims for such supplies delivered to Medicare beneficiaries by mail (e.g., common carrier).  Claims with the KL modifier are paid at the lower rate.  We will review claims billed without KL modifiers to confirm whether the resulting higher payments were proper.  (CMS’s Medicare Claims Processing Manual, Pub. 100-04, ch. 36, § 20.5.4.1.)  (OAS; W-00-13-35704; various reviews; expected issue date:  FY 2013; new start)

Program Integrity—Onsite Visits for Medicare Provider and Supplier Enrollment and Reenrollment (New)

We will determine how often onsite visits occur as part of the Medicare enrollment or reenrollment process.  CMS reserves the right, when deemed necessary, to perform onsite inspections of a provider or supplier to verify enrollment information submitted to CMS.  (42 CFR § 424.510(d)(8).)  Moreover, CMS is authorized to expand the role of unannounced preenrollment site visits.  (Affordable Care Act, § 6401(a)(3).)  CMS implemented the Affordable Care Act provider and enrollment provisions by requiring onsite visits for provider and supplier types identified by CMS as moderate risk or high risk.  (76 Fed. Reg. 5862 (February 2, 2011).)  A prior OIG review found that 33 percent of medical equipment suppliers in South Florida did not maintain physical facilities, a vulnerability that might be reduced by confirming legitimacy of location with onsite visits conducted during the enrollment process. (OEI; 00-00-00000; expected issue date:  FY 2014; new start.  Affordable Care Act.)

Program Integrity—Improper Use of Commercial Mailboxes (New)

We will determine the extent to which Medicare Part B providers and suppliers had practice locations that matched commercial mailbox addresses in 2011.  Medicare providers and suppliers are required to establish physical business facilities of adequate size and with permanent, visible signs and must provide CMS with specific street addresses (not mailboxes) recognized by the U. S. Postal Service.  Recent evidence suggests that individuals attempting to defraud Medicare may be using mailbox rental services to evade enforcement of this requirement, as commercial mailbox services provide a recognized street address without a mailbox number.  (OEI; 00-00-00000; expected issue date:  FY 2014; new start)

Program Integrity—Payments to Providers Subject to Debt Collection (New)

We will review providers and suppliers that received Medicare payments after CMS referred them to the Department of the Treasury (Treasury) for failure to refund overpayments.  We will determine the extent to which they ceased billing under one Medicare provider number but billed Medicare under a different number after being referred to Treasury.  CMS may deny a provider’s or supplier’s enrollment in the Medicare program if the current owner, physician, or nonphysician practitioner has an existing overpayment at the time of filing an enrollment application.  Federal law requires CMS to seek the recovery of all identified overpayments.  The Debt Collection Improvement Act of 1996 (DCIA) requires Federal agencies to refer eligible delinquent debt to Treasury for appropriate action.  (42 CFR § 424.530(a)(6).)  (OAS; W-00-12-35622; various reviews; expected issue date: FY 2013; work in progress)

Anesthesia Services —Payments for Personally Performed Services (New)

We will review Medicare Part B claims for personally performed anesthesia services to determine whether they were supported in accordance with Medicare requirements.  We will also determine whether Medicare payments for anesthesiologist services reported on a claim with the “AA” service code modifier met Medicare requirements.  Physicians report the appropriate anesthesia modifier to denote whether the service was personally performed or medically directed.  (CMS’s Medicare Claims Processing Manual, Pub. No. 100-04, ch.12, § 50)  The service code “AA” modifier is used for anesthesia services personally performed by an anesthesiologist, and the “QK” modifier is used for medical direction of two, three, or four concurrent anesthesia procedures by an anesthesiologist.  The QK modifier limits payment at 50 percent of the Medicare-allowed amount for personally performed services claimed with the AA modifier.  Payments to any service provider are precluded unless the provider has furnished the information necessary to determine the amounts due.  (Social Security Act, §1833(e).) (OAS; W-00-13-35706; various reviews; expected issue date: FY 2013; new start)

Ophthalmological Services—Questionable Billing (New) 

We will review Medicare claims data to identify questionable billing for ophthalmological services during 2011.  We will also review the geographic locations of providers exhibiting questionable billing for ophthalmological services in 2011.  Medicare payments for Part B for physician services, which include ophthalmologists, are authorized by the Social Security Act, § 1832(a)(1), and 42 CFR § 410.20.  In 2010, Medicare allowed over $6.8 billion for services provided by ophthalmologists.  (OEI; 04-12-00280; expected issue date:  FY 2014; work in progress)

Rural Health Clinics—Compliance With Location Requirements (New)

We will determine the extent to which Rural Health Clinics (RHC) do not meet basic location requirements.  The Balanced Budget Act of 1997 permitted the Centers for Medicare & Medicaid Services (CMS) to remove clinics that do not meet location requirements from the RHC program.   In 2005, OIG recommended that CMS promulgate regulations implementing the Balanced Budget Act of 1997.  CMS has yet to promulgate the final regulations allowing for the removal of RHCs.  As a result, RHCs that no longer meet eligibility requirements continue to receive enhanced Medicare reimbursement.  We will determine the extent to which such reimbursements are occurring.  (OEI; 00-00-00000; expected issue date:  FY 2014)

Electrodiagnostic Testing—Questionable Billing (New) 

We will review Medicare claims data to identify questionable billing for electrodiagnostic testing.  We will also determine the extent to which Medicare utilization rates differ by provider specialty, diagnosis, and geographic area for these services.  Electrodiagnostic testing, which assists in the diagnosis and treatment of nerve or muscle damage, includes the needle electromyogram and the nerve conduction test.  Coverage for diagnostic testing is provided by the Social Security act, § 1861(s)(2), and 42 CFR § 410.32.)  The use of electrodiagnostic testing for inappropriate financial gain poses a growing vulnerability to Medicare.  (OEI; 04-12-00420; expected issue date:  FY 2013; work in progress)

Claims Processing Errors—Medicare Payments for Part B Claims With G Modifiers (New)

We will determine the extent to which Medicare improperly paid claims from 2002 to 2011 in which providers entered GA, GX, GY, or GZ service code modifiers, indicating that Medicare denial was expected.  Providers may use GA or GZ modifiers on claims they expect Medicare to deny as not reasonable and necessary pursuant to CMS’s Claims Processing Manual.  They may use GX or GY modifiers for items or services that are statutorily excluded.  A recent OIG review found that Medicare paid for 72 percent of pressure-reducing support surface claims with GA or GZ modifiers, amounting to $4 million in potentially inappropriate payments.  (OEI; 02-10-00160; expected issue date: FY 2013; work in progress)

Ehics—Conflicts of Interest Involving Prescription Drug Compendia (New) 

We will determine the extent to which the prescription drug compendia oversee conflicts of interest through reporting requirements and/or mitigation policies and the number and nature of the compendia’s reported conflicts.  Generally, Medicare covers drugs that are approved by FDA and supported by one or more drug compendia recognized by CMS.  (Benefits Policy Manual, Pub. 100-02, ch. 1, § 30, and ch. 15, § 50.) Recent concerns have highlighted the issue of conflicts of interest involving the drug compendia; however, CMS does not require the compendia to regularly publish conflict information, and it is unclear whether CMS conducts any oversight of the strength of the compendia’s policies or the nature of their conflicts.  (OEI; 00-00-00000; expected issue date: FY 2014; new start)

Patient Safety and Quality of Care—Physicians’ Experiences With Drug Shortages (New)

We will determine the extent to which providers of selected Part B-covered drugs in short supply report difficulty acquiring those drugs.  During shortages, physicians may have to ration their supplies of certain drugs; delay treatments; use different drugs, which may be less effective; or resort to potentially untrustworthy sources to acquire drugs.  In addition, we will ask providers to describe their behavior when facing a drug shortage as well as any effect on pricing, quality of care, and market availability.  (OEI; 00-00-00000; various reviews; expected issue date: FY 2014; new start)

Patient Safety and Quality of Care—Hospitals’ Experiences With Drug Shortages (New)

We will determine hospitals’ reported experiences with drug shortages.  During shortages, hospitals may have to ration their supplies of certain drugs; delay treatments; use different drugs, which may be less effective; or resort to potentially untrustworthy sources to acquire drugs.  In addition, we will ask providers to describe their behavior when facing a drug shortage as well as any effect on pricing, quality of care, and market availability.  (OEI; 00-00-00000; various reviews; expected issue date: FY 2014; new start)

Patient Safety and Quality of Care—Manufacturer Sales of Prescription Drugs in Short Supply (New)

We will quantify the effect of drug shortages on manufacturer sales.  According to FDA, a record number of drugs were in short supply in 2010 and the number of drug shortages continued to grow in 2011.  We will also use data from CMS to determine the extent to which demand and average sales prices of drugs changed when the drugs were reportedly in shortage.  For any drug that did not show substantial decline in unit during the shortage quarter, we will analyze Part B claims data to determine whether there was an increase in Part B utilization during that period.  (OEI; 00-00-00000; various reviews; expected issue date: FY 2014; new start)

Potential Savings From Manufacturer Rebates for Part-B Drugs  (New) 

We will determine the potential savings associated with requiring manufacturers to pay rebates to  Medicare Part B for those drugs Part B pays for on behalf of beneficiaries who are not also eligible for Medicaid (i.e., are not dual eligibles).  Pursuant to the Omnibus Budget Reconciliation Act of 1990, pharmaceutical manufacturers are required to remit rebates for prescription drugs paid under Medicaid.  Because of the statutorily mandated rebates, Federal and State governments were able to recoup approximately $11 billion of the $29 billion that Medicaid spent on prescription drugs in 2010.  Medicare Part B spent over $16 billion on covered prescription drugs that same year.  However, a comparable rebate program does not exist for Medicare Part B.  (OEI; 12-12-00260; expected issue date: FY 2013; work in progress)

Payments for Immunosuppressive Drug Claims With KX Modifiers (New)

We will determine whether Medicare Part B payments for immunosuppressive drugs billed with a certain claims service code modifier (“KX” modifier) met Medicare documentation requirements.  Medicare Part B covers FDA-approved immunosuppressive drugs and drugs used in immunosuppressive therapy when a beneficiary receives an organ transplant for which immunosuppressive therapy is appropriate.  (Social Security Act, § 1861(s).)  Entities that bill for immunosuppressive drugs are required to submit claims to a designated Medicare payment contractor.  On or after July 2008, suppliers that furnish an immunosuppressive drug to a Medicare beneficiary annotate the claim with the KX modifier to signify that the supplier retains documentation of the beneficiary’s transplant date and that such transplant date preceded the date of service for furnishing the drug.  (Medicare Claims Processing Manual, Pub. 100-04, ch. 17, § 80.3)  (OAS; W-00-13-35707; various reviews; expected issue date: FY 2013; new start)

Payments for Drugs Infused Through Medical Equipment Compared to Provider Acquisition Costs (New)

We will review provider acquisition costs for Part B-covered drugs infused through medical equipment.  We will also determine the amount Medicare could have saved had payment amounts for these drugs been based on ASP.  Unlike most drugs covered under Medicare Part B, drugs infused through medical equipment are paid based on average wholesale prices (AWP).  (42 CFR § 414.904(e).)  Prior OIG reports found that the AWPs for Part B-covered drugs often greatly exceeded the drugs’ actual costs.  (OEI; 12-12-00310; expected issue date: FY 2013; work in progress)

Payments for Prostate Cancer Drugs Under Current Policy (New)

We will determine the financial impact of rescinding least costly alternative policies (LCA) for certain prostate cancer drugs covered under Medicare Part B.  We will also determine how Medicare Part B utilization for those drugs changed after the LCA policies were rescinded.  Between 1995 and 2010, certain prostate cancer drugs covered under Medicare Part B were subject to LCA policies, which based the payment amount for a group of clinically comparable products on that of the least costly one.  However, in April 2010, LCA policies for Part B drugs were discontinued in response to a court ruling that found that the use of an LCA policy for certain prescription drugs was not authorized under Medicare law.   (OEI; 12-12-00210; expected issue date: FY 2013; work in progress)

Overview of CMS’s Contracting Landscape (New)

This review will provide an overview of the contracting landscape at CMS.  CMS relies extensively on contractors to help it carry out its basic mission, including administration, management, and oversight of its health programs.  In fiscal year 2009, CMS awarded $4 billion in contracts.  Recent Government Accountability Office (GAO) reports have found pervasive deficiencies in CMS’s contract management internal control.  Given the number of contracts and the obligated dollars for which CMS is responsible, oversight and monitoring are vital for ensuring effective programs and safeguarding taxpayer dollars.  This review will determine the number, types, and dollar amount of active CMS contracts and examine how CMS maintains all of its contract information. (OEI; 03-12-00680; expected issue date:  FY 2013; work in progress)

CMS’s Compliance With Contract Documentation Requirements (New)

We will determine the extent to which CMS complies with contract documentation requirements.  CMS relies on contractors to perform many of its program functions.  Prior work by the Office of Inspector General has consistently identified vulnerabilities in CMS’s oversight of its contractors, and reports by the Government Accountability Office have specifically identified contract file documentation as an area of concern.  The Federal Acquisition Regulation (FAR) and HHS Regulations establish rules and standards for awarding and administering Government contracts, including requirements for contract file documentation.  We will also determine how CMS ensures that contract file documentation is maintained as required by regulation.  (OEI; 00-00-00000; expected issue date:  FY 2014; new start)

Medicare Administrative Contractors—CMS’s Assessment and Monitoring of Performance (New) 

We will determine the extent to which CMS conducted performance assessment and monitoring of MACs.  We will also describe the extent to which MACs met, did not meet, or exceeded performance standards and determine the extent to which CMS identified and MACs addressed performance deficiencies.  Federal law requires the Secretary to administer Medicare Part A and Part B through contracts with MACs and to develop specific performance requirements and standards for measuring the extent to which MACs meet them.  (Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), § 911.)  Previous OIG and GAO work has identified vulnerabilities in CMS’s oversight of its contractors.  This evaluation will build upon this body of work.  (OEI; 03-11-00740; expected issue date: FY 2013; work in progress)

Medicare Administrative Contractors—Use and Management of System of Edits (New)

We will determine whether MACs fulfilled their contractual obligations specific to system edits in 2010 and 2011.  We will also describe how MAC error rates varied across regions compared to differences in MACs’ implementation, application, and evaluation of edits in 2010 and 2011.  MACs are responsible for consolidating all Part A and Part B edits within their jurisdiction, as well as developing and testing final edits; implementing and using initial, local system, and medical review edits; and evaluating edit effectiveness.  Since these automated edits are one of the only safeguards for identifying improper payments before Medicare payment is made, it is important that MACs properly implement and use edits.  (OEI; 04-12-00140; expected issue date:  FY 2014; work in progress)

Claims Processing Contractors—Failure To Conduct Prepayment Reviews in Response to Edits  (New)

We will determine the number of Part B claims that were suspended for manual prepayment review on the basis of system edits but on which the reviews were not conducted.  Because manual review is more timely and costly to the contractor, some suspended claims might not receive the review and, therefore, may be paid inappropriately.  When a medical review edit reveals a billing error or claim anomaly, Medicare claims processing contractors (MACs, carriers, and intermediaries) may conduct manual prepayment or postpayment reviews.  (CMS’s Program Integrity Manual, Pub. 100-08, ch. 3.)  They may also request additional medical documentation from the provider/supplier or contact beneficiaries to verify that the services actually were provided.  (OEI; 00-00-00000; expected issue date:  FY 2014; new start)

Payments for Incarcerated Beneficiaries (New) 

We will determine whether Medicare payments for incarcerated beneficiaries complied with Federal requirements.  Medicare, in general, does not pay for services rendered to incarcerated beneficiaries; however, the regulation does permit Medicare payment where an incarcerated beneficiary has an obligation for the cost of care.  (Social Security Act, § 1862, and 42 CFR § 411.4.)  The Common Working File will reject claims on which the dates of incarceration (as obtained from the Social Security Administration) and the dates of service on the claim overlap.  (CMS’s Medicare Claims Processing Manual, ch 1, § 10.4.) In addition, the Medicare Claims Processing Manual provides instructions for providers who render services to incarcerated beneficiaries who meet the criteria for exception.  Our review will determine whether Medicare payments were made for incarcerated beneficiaries who did not meet the criteria for exception identified in the regulations.  (OAS; W-00-12-35624; various reviews; expected issue date: FY 2013; work in progress)

Payments for Alien Beneficiaries Unlawfully Present in the United States on the Dates of Service (New) 

We will determine whether Medicare payments were made on behalf of beneficiaries who were unlawfully present in the United States on the dates of services.  Medicare payment may not be made for items and services furnished to alien beneficiaries who were not lawfully present in the United States.  (CMS’s Medicare Claims Processing Manual, ch 1, § 10.1.4.8.)  Medicare prohibits payment for services rendered to individuals who are not “qualified aliens.”  (Personal Responsibility and Work Opportunity Reconciliation Act of 1996, § 401. )  CMS relies on an auxiliary file based on enrollment data maintained by the Social Security Administration to identify claims associated with alien beneficiaries.  (BBA, § 5561.)  (OAS; W-00-12-35625; various reviews; expected issue date: FY 2013; work in progress)

Payments for Services After Beneficiaries’ Death (New)

We will review Medicare claims dates to determine whether Medicare payments were made for deceased beneficiaries in 2011.  We will also identify trends of Medicare claims with service dates after  beneficiaries’ dates of death.   According to a prior OIG report, Medicare paid $20.6 million in 1997 for Part A and Part B services that purportedly started after beneficiaries’ dates of death.  (OEI; 04-12-00170; expected issue date:  FY 2013; work in progress)

Undelivered Medicare Summary Notices (New)

We will review the procedures that CMS and claims processors have for handling undelivered Medicare Summary Notices (MSN).  It is important that beneficiaries review their MSNs to ensure that there are no errors and that all items and services listed on the MSNs were actually received.  CMS urges beneficiaries to review their MSNs to help protect Medicare and themselves from fraud; however, if beneficiaries do not receive their MSNs, they are unable to review them and report errors.  (OEI; 03-12-00600; expected issue date:  FY 2014; work in progress)

Medicare Integrity Program—CMS’s Overall Strategy (New)

We will review CMS’s overall strategy to maintain the integrity of the Medicare.  The Medicare Integrity Program (MIP) was established through 42 U.S.C. § 1395ddd and requires CMS to contract with entities to carry out various program integrity activities to safeguard against fraud, waste, and abuse in Medicare Parts A and B.  Over the past few years, Congress has submitted multiple letters to CMS questioning the effectiveness of the program integrity efforts of these contractors.  We will also determine how CMS allocates funds for MIP activities and review the measures CMS uses to evaluate the performance and overall effectiveness of the MIP.  (OEI-03-12-00690; expected issue date:  FY 2013 work in progress)