Life Science Compliance Update

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May 31, 2016

E&C Subcommittee Hearing, HHS OIG and GAO Reports on Medicare and Medicaid Fraud Enforcement – More Work to Be Done

On May 24, 2016, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing entitled, "Medicare and Medicaid Program Integrity: Combatting Improper Payments and Ineligible Providers." The hearing also coincided with a series of reports released by the Health and Human Services (HHS) Office of Inspector General (OIG) related to Centers for Medicare and Medicaid Services (CMS) oversight in the federal programs, as well as with a report issued by the Government Accountability Office (GAO) relating to CMS.

Opening Statements

Full Committee Chairman Fred Upton and Subcommittee Chairman Tim Murphy opened the hearing, and they, along with some of their politically-aligned colleagues noted the work of both the OIG and the GAO and highlighted the need for CMS to continue to implement recommendations made by the agencies. Both Chairmen expressed concern about improper payments, including Rep. Murphy mentioning the approximately $89 million in improper payments and Rep. Upton mentioned improper payments to locations that do not exist.

Subcommittee Ranking Member Diana DeGette (D-CO) said in her opening remarks that fraud and abuse in Medicare and Medicaid was a "longstanding, pervasive challenge." She mentioned she was encouraged by recent successes of CMS implementing program integrity efforts that were brought about by the Affordable Care Act (ACA) and that these new tools should greatly enhance CMS' ability to achieve antifraud goals.


Testimony was elicited first from Ann Maxwell, the Assistant Inspector General at the Office of Evaluation and Inspections within HHS OIG. She testified that oversight of provider enrollment in both Medicare and Medicaid is critical. She believes that enrollment in the program is truly "where is starts" and that once they are enrolled, providers essentially have a "green light" to start billing CMS. She also noted that she had some concerns about the different information about the same providers between Medicare and Medicaid; she believes that it was hard to know who you are doing business with "if you can't even get the name right."

Dr. Seto Bagdoyan, the Director of Audit Services with the GAO discussed that his office had recommended that CMS improve address verification processes. He believes that such a move will help to prevent future instances of CMS making incorrect payments to non-existent addresses.

The Deputy Administrator at the Center for Program Integrity at CMS, Dr. Shantanu Agrawal, noted that there are efforts underway to improve payment accuracy including site visits, automated risk based screening efforts, and targeted enforcement efforts. He said that CMS' work so far as resulted in a $2.4 billion program savings.


Ensuring Access to Quality Medicaid Providers Act

This legislation, which would require the states to report Medicaid provider terminations to CMS, received bipartisan support from the Subcommittee. Ranking Member Diana DeGette encouraged her colleagues in the Senate to take the bill up, following its passage in the House of Representatives.

Improper Payment Rate

The vast majority of the hearing's discussion focused on improper payments in both Medicare and Medicaid. Improper payments occur when federal fund go to the wrong recipient, when the recipient receives the incorrect amount of funds (overpayments and underpayments), documentation is not available to support a payment, or the recipient uses federal funds in an improper manger. A recent OIG report found that HHS had a payment error rate of 12% in FY 2015.

Prior Authorization

Dr. Agrawal mentioned that CMS was increasing the use of prior authorization, which requires the service to be approved by CMS prior to the service being rendered. Dr. Agrawal feels as though it is a useful tool and that while he may be open to more focused prior authorization usage, he thinks that the agency needs more experience before begin able to do so successfully.

The OIG and GAO Reports


The HHS OIG released three reports: "Medicaid: Vulnerabilities Related to Provider Enrollment and Ownership Disclosure," "Medicare: Vulnerabilities Related to Provider Enrollment and Ownership Disclosure," and "Medicaid Enhanced Provider Enrollment Screenings Have Not Been Fully Implemented."

The first report resulted in seven recommendations being made by OIG to resolve issues revolving around disclosure and ownership information. Those seven recommendations included CMS: working with State Medicaid programs to identify and correct gaps in their collection of required provider ownership data; require State Medicaid programs to verify the completeness and accuracy of provider ownership information; and work with State Medicaid programs to review providers that submitted nonmatching owner names and take appropriate action.

The second report ended with four recommendations for CMS, including: reviewing providers that submitted nonmatching owner names and take appropriate actions; educate providers on the requirement to report changes of ownership; and increase coordination with State Medicaid programs on the collection and verification of provider ownership information in Medicare and Medicaid.

The third report included six recommendations, all of which CMS concurred with. The recommendations included: CMS assist the states in implementing fingerprint based criminal background checks for all high risk providers; enable the States to substitute Medicare screening data by ensuring the accessibility and quality of Medicare data; and strengthen minimum standards for fingerprint-based criminal background checks and site visits.


The GAO report, titled "Continued Action Required to Address Weaknesses in Provider and Supplier Enrollment Controls," highlighted progress that CMS has made in implementing previous recommendations related to oversight of providers that are enrolling in the agency's Provider Enrollment, Chain and Ownership System (PECOS).


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