Kusserow’s Corner: OIG Reports Planned Reduction in Resources

For a different perspective, see Jay Nawrocki’s discussion of the OIG’s staff cuts.

Last week I reported on the June 24th testimony of my old office, the DHHS Office of Inspector General (OIG), before the Senate Committee on Homeland Security and Governmental Affairs.  The OIG testimony focused on “Curbing Prescription Drug Abuse”.   Testifying on behalf of the OIG were Gary Cantrell, Deputy Inspector General for the OIG Office of Investigations; and Stuart Wright, Deputy Inspector General for the OIG Office of Evaluations and Inspections.

During the question period following presentation of findings related to the subject of the hearing, the OIG reported it is planning to scale back or drop a number of Medicare and Medicaid fraud and abuse investigations due to budgetary constraint. It testified it is prepared to have a reduction of 400 full-time equivalent staff. It will being with a reduction of 200 positions, with another 200 by the end of 2015. This will necessarily result in a cutback of investigations of complaints.  Already, it has had to shelve more than 1,200 complaints received over the last year and it expects that number will increase due to the cutback.  

It is currently reviewing its annual work plan for 2013 to determine which projects will have to be scaled back.  The plan identifies where the OIG has reason to believe fraud or abuse of DHHS programs may exist.  It is used by the health care sector as an early indicator of government interest and serves as a warning flag that permits organizations and entities to take steps to ensure they are operating appropriately in these areas of concern.  The Plan also reflects and works to address concerns of DHHS government agencies, such as CMS

In its Semi-Annual Report for October 1, 2012-March 31, 2013, the OIG reported expected recoveries for FY 2012 of about $6.9 billion, consisting of $923.8 million in audit receivables and $6 billion in investigative receivables (which includes $1.7 billion in non-HHS investigative receivables resulting from work in areas such as the States’ shares of Medicaid restitution).  The OIG also identified about $8.5 billion in savings estimated for FY 2012 as a result of legislative, regulatory, or administrative actions that were supported by its recommendations.

It should be noted that approximately 80 percent of the OIG’s annual budget is dedicated to CMS programs. Most of the funding for this effort doesn’t come from appropriated funds of Congress, but from the Health Care Fraud and Abuse Control (HCFAC) program, which is under the direction of the Attorney General and the HHS Secretary.  This fund sets aside a set percentage of the receivables from health care fraud recoveries to fund these investigations.  HCFAC constitutes the major portion of the OIG’s operating budget.  In its 2013 budget request, the OIG asked for $310 million in base funding from that source, out of the total request of $370 million.  As such, any percentage decrease from the HCFAC source is far more significant than from appropriated funding by the Congress.

It will be interesting to see how this funding problem turns out.

Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters.  The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC.  Published with permission.