Kusserow on Compliance: Summary of Top 10 Management & Performance Challenges Facing HHS

The HHS Office of Inspector General (OIG) has released its 2014 report on the Top Management and Performance Challenges (TMC). Annually, the OIG prepares a summary of the TMC facing HHS. Many of the challenges noted reflect continuing vulnerabilities previously identified, as well as new and emerging issues. This report fulfills OIG’s requirement under the Reports Consolidation Act of 2000 (P.L. 106-531) to identify these management challenges, assess progress in addressing each challenge, and submit this statement annually. This year’s report includes the following areas:

  1. Implementing, Operating, and Overseeing the Health Insurance Marketplaces, also known as Health Insurance Exchanges. Marketplaces are critical for the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). In 2014, CMS operated Marketplace functions on behalf of 36 states, which created one of the most significant challenges for HHS and will continue in 2015. These include ensuring accurate eligibility determinations; processing enrollments, re-enrollments, and qualifying life change events; and communicating timely and accurate information to health insurance issuers and consumers. They must also facilitate Medicaid enrollment for those who qualify, requiring effective communication and coordination between and among all internal and external parties with the Internal Revenue Service (IRS). The OIG cites progress, but notes additional work is needed.
  2. Ensuring Appropriate Use of Prescription Drugs in Medicare and Medicaid. CMS provides prescription drug coverage for 4 million Medicare beneficiaries and 59.4 million Medicaid beneficiaries with the combined prescription drug expenditures of $93 billion. The OIG cited its ongoing monitoring and oversight of the programs, and noted that it has uncovered improper and potentially harmful prescribing practices, pharmacies billing for drugs not dispensed, and diversion of prescription drugs. The OIG noted CMS’ actions to date, but stated CMS must increase Part D plan sponsors’ abilities to limit questionable utilization of drugs, particularly drugs that are vulnerable to diversion and recreational abuse. The report cites the following as examples of identified problem areas: Questionable Utilization and Billing Patterns for HIV drugs; Drug Diversion and Abuse of Controlled Substances; and Drug Diversion and Abuse of Non-Controlled Substances. Noted as a rapidly growing trend is the illegal billing and diversion of non-controlled medications (e.g., anti-psychotics), which presents a substantial financial vulnerability to federal health care programs. Many cases involve pharmacies billing federal programs for expensive brand-name medications that were never dispensed.
  3. Protecting an Expanding Medicaid Program From Fraud, Waste, and Abuse. CMS reported that enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) had increased by 8.7 million people since individuals became eligible to apply under the ACA’s expanded eligibility With this growth, so does the urgency in finding ways to control inappropriate spending through Iimplementing a functional, national Medicaid database for effective oversight of payments and services. OIG continues to find existing national Medicaid data are not complete, accurate, or timely and that additional data are needed to conduct national Medicaid program integrity activities. Coupled with this is the problem of identifying and recovering improper payments estimated at 5.8 percent. With almost three-quarters of all Medicaid beneficiaries were enrolled in some type of managed care system, it creates a challenge to ensure program integrity. Another problem identified is the state policies that inflate federal costs.
  4. Fighting Waste and Fraud and Promoting Value in Medicare Parts A and B. HHS must reduce wasteful spending, estimated that 30 percent of U.S. health spending (public and private) or roughly $750 billion. The OIG credited CMS with steps taken in 2014, but noted additional focused attention is needed on reducing improper payments through using contractors; better prevention of and responding to fraud; fostering more economical payment policies; and transitioning from volume to value-based payments.
  5. Ensuring Quality in Nursing Home, Hospice, and Home- and Community-Based Care. HHS faces challenges in ensuring that beneficiaries who require nursing home, hospice, or home- and community-based services (HCBS) receive high quality The OIG is continuing its work with the DOJ and others to pursue enforcement actions against those that render substandard care. The OIG cited new legislation to assist in this effort, and calls upon HHS to continue high priority to quality of nursing home, hospice, and HCBS.
  6. The Meaningful and Secure Exchange and Use of Electronic Health Information. There is increased reliance upon health information technology (HIT) and the electronic exchange and use of health It also creates problems of protecting health information. The Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 requires adopting, implementing, upgrading, or demonstrating meaningful use of electronic health records (EHRs) and established a variety of grant programs to encourage widespread adoption of EHRs, as well as reporting of breaches of unsecured protected health information. The OIG cited a number of challenges that have arisen from these new requirements.
  7. Effectively Operating Public Health and Human Services Programs To Best Serve Program Beneficiaries. HHS funds and operates public health and human services programs that promote health and economic and social well-being, including programs to prevent, track, and treat acute and chronic diseases; respond to natural and man-made disasters; and protect, care for, and educate children. Key challenges include (1) ensuring effective preparedness and response to current and future public health emergencies, (2) protecting the health and safety of America’s vulnerable populations, and (3) ensuring access for intended beneficiaries and delivery of quality services such that beneficiaries’ needs are met.
  8. Ensuring Effective Financial and Administrative Management. The huge size of HHS creates a major stewardship obligation that has as its underpinning financial management an administrative infrastructure that employs appropriate internal controls to minimize risk to the programs and safeguard Financial statement audits are crucial to this effort. A major focus of effort must be on improper payments cost federal programs billions of dollars annually that was estimated at almost $50 billion in the Medicare program alone and $65 billion overall.
  9. Protecting HHS Grants and Contract Funds From Fraud, Waste, and Abuse. HHS is the third largest grant-making and contracting organization in the federal government with over $389 billion in grants and $20 billion in contracts last year. The OIG noted weaknesses in the oversight of grantees, as demonstrated by late or absent financial and related reports, insufficient documentation on progress toward meeting program goals, and failure to ensure that grantees obtain required annual financial audits.
  10. Ensuring the Safety of Food, Drugs, and Medical Devices. HHS, through the FDA, is responsible for protecting public health by ensuring the safety, efficacy, and security of drugs, medical devices, biologics, dietary supplements, tobacco, and much of our nation’s food It must ensure that once a drug, biologic, or device has been approved for use, it conducts effective post-market monitoring. The OIG’s work has revealed weaknesses in the FDA’s ability to adequately oversee the safety of drugs, biologics, medical devices, and food. The OIG cited particular problem areas as including drug compounding, importing of modified drugs, food safety problems, dietary supplements, and marketing abuses.

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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