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OIG Plans to Fight Fraud, Waste, and Abuse While Promoting Quality, Safety, and Value in 2014

Written by:  Bridgette A. Wiley

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) released its Work Plan for Fiscal Year 2014 on January 31, 2014. The Work Plan provides insight into the OIG’s priorities by providing a brief description of the activities it will initiate and continue during fiscal year 2014.  Albeit several months late, the newly published Work Plan aligns with OIG’s Strategic Plan, published in November 2013, and furthers its goals of fighting fraud, waste, and abuse; promoting quality, safety, and value; securing the future; and advancing excellence and innovation.

In addition to its ongoing projects, OIG sets the objectives for 60 new initiatives related to HHS programs and operations, as well as its reviews related to the Affordable Care Act and the Recovery Act.  Highlights of OIG’s new initiatives for 2014 include:

Medicare Part A and B

  • New inpatient admission criteria. OIG previously found overpayments for short inpatient stays, inconsistent billing practices among hospitals, and financial incentives for billing Medicare inappropriately.  As a result, OIG will study the impact of new inpatient admission criteria –patients must be expected to need at least 2 nights of inpatient care to be admitted – on hospital billing, Medicare payments, and beneficiary payments. 
  • Oversight of pharmaceutical compounding.  In light of the recent meningitis outbreak resulting from contaminated injections of compounded drugs, OIG will describe Medicare’s oversight of pharmaceutical compounding in Medicare-participating acute care hospitals and how such services should be assessed by State agencies and hospital accreditors. 
  • Outpatient evaluation and management services billed at the new-patient rate.  OIG has identified overpayments resulting from hospitals using new-patient codes to bill for services provided to established patients.  As a result, OIG will review Medicare outpatient payments made to hospitals for clinic visits billed at the new-patient rate to determine whether payment was appropriate and will recommend recovery of overpayments as needed.
  • Manufacturer reporting of average sales prices (ASP) for Part B drugs. The OIG has previously found that a number of manufacturers did not provide to CMS ASP data for their Part B drugs as required by law. (With certain exceptions, the Medicaid drug rebate agreement requires manufacturers to provide CMS with pricing information, including the ASPs, for their Part B drugs.)  In fact, OIG found that not only do many manufacturers ignore reporting requirements, but almost 20% of the manufacturers who do submit ASP data to CMS are not even required to do so.  Unfortunately, CMS relies on this data to set payment amounts for drugs covered under Medicare Part B.  Therefore, OIG will study the potential effect on average sales price reporting if all manufacturers of Part B-covered drugs were required to submit ASPs to CMS. They will also determine whether CMS has improved its process for collecting ASP data, as was previously recommended.
  • Covered uses for Medicare Part B drugs.  To assure that Medicare and its beneficiaries are not paying for drugs with little clinical evidence of safety and effectiveness, OIG plans to review CMS and MAC oversight mechanisms to determine whether payments for Part B drugs meet the coverage criteria.  Part B generally covers drugs for “on label” use to treat conditions as approved by the FDA and for “off label” use when that particular use is supported by clinical evidence in authoritative medical literature.  

Medicare Part C and D

  • Comparison of Medicare Part D and Medicaid pharmacy reimbursement and rebates.  A previous OIG review revealed that Part D sponsors and State Medicaid agencies paid pharmacies roughly the same amounts for brand-name drugs. However, statutorily defined Medicaid unit rebate amounts for brand-name drugs exceed Part D unit rebate amounts by a substantial margin, which should result in lower drug program costs for Medicaid.  OIG will follow its previous review to compare pharmacy reimbursement and rebate amounts for a sample of brand-name drugs paid by Medicare Part D and by Medicaid.  
  • Documentation of pharmacies’ PDE data.   OIG will conduct additional reviews of selected retail pharmacies identified in a prior OIG report as having questionable Part D Billing.  They will focus on whether Medicare Part D PDE records submitted by the selected pharmacies were adequately supported and complied with applicable Federal requirements.


  • Medicaid managed care reimbursement.  OIG will review States’ managed care plan reimbursements to determine whether managed care organizations (MCOs) are appropriately and correctly reimbursed for services provided.  The review will focus on the reliability of data used to set rates and verification that risk-sharing mechanisms and incentive payments made to MCOs comply with all legal requirements. 

The foregoing is a sampling of the numerous new and ongoing projects OIG plans to work on during Fiscal Year 2014.  To hear additional insights on the Work Plan from OIG’s senior leadership, check out the OIG Outlook 2014.

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Theresa advises clients on all aspects of the pharmaceutical supply chain, including counseling industry stakeholders on a range of business, legal, transactional, and compliance matters. She provides clients with strategic counseling and creative business modeling that considers legal restrictions and regulatory risk in light of innovation and business goals.