Kusserow on Compliance: GAO reported continued fraud vulnerability under the Affordable Care Act

The Government Accountability Office (GAO) issued a report that the Affordable Care Act (ACA) marketplaces remain “vulnerable to fraud,” after the agency successfully applied for coverage for multiple fake people, who hadn’t filed tax returns for 2014 but were still able to get tax credits to help pay their monthly premiums for 2016 coverage. The GAO engaged in testing by using undercover attempts to obtain health-plan coverage from the federal marketplace and selected state marketplaces for 2015. The tests found the federal marketplace and selected state marketplaces approved each of 10 fictitious application for subsidized health plans. All 10 were approved, even though eight of these 10 fictitious applications failed the initial online identity-checking process.

Four applications used Social Security numbers that were never been issued. Other applicants obtained duplicate enrollment or obtained coverage by claiming that their employer did not provide insurance that met minimum essential coverage. Three of GAO’s applications were approved for Medicaid, although GAO provided identity information that would not have matched Social Security. For two applications, the marketplace or state Medicaid agency directed the fictitious applicants to submit supporting documents, and GAO provided fake information that resulted in the applications were approved. A third marketplace did not seek supporting documentation, and the application was approved by phone. CMS, California, Kentucky, and North Dakota, advised the GAO that they are only inspecting for supporting documentation that has obviously been altered; otherwise documentation submitted would not be questioned for authenticity.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

New rule would allow attorney adjudicators, precedential Council decisions

In light of the incredible administrative backlog of Medicare appeals, CMS has proposed some changes to the appeals process. The agency now finds it appropriate to allow the chair of the Departmental Appeals Board (DAB) to deem Medicare administrative council (MAC) decisions precedential. The Proposed rule also suggests allowing attorney adjudicators to issue decisions that do not involve a hearing, dismissals for withdrawn hearing requests, and remands for information.

Never going to catch up

In fiscal year (FY) 2014, each administrative law judge (ALJ) in the Office of Medicare Hearings and Appeals (OMHA) issued an average of 1,048 decisions and ordered over 450 other claims to be dismissed. Despite this increased productivity, the number of requests for hearings and reviews of QIC and IRE dismissal continue to grow. OMHA currently has the capacity adjudicate about 77,000 claims annually, but over 750,000 appeals were pending on April 30, 2016. In order to address these issues, HHS intends to implement new rules in an attempt to (1) request new resources for all levels of appeal; (2) reduce the number of pending appeals; and (3) reform legislation to allow new funding and new review authority.

Precedential decisions

MAC decisions are considered the final administrative decision, and once they are issued a party may proceed to judicial review. In 2004, HHS determined that precedential authority was not yet appropriate for these decisions, at least until after changes required under the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) (P.L. 106-554) and the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) (P.L. 108-173) were implemented. Now that they are, CMS proposes that the chair of the DAB have the authority to designate a MAC decision precedential in order to provide a “consistent body of final decisions of the secretary upon which [appellants] could determine whether to seek appeals.” CMS also believes that this would assist all adjudicators by providing clarity on some legal and policy issues.

When a decision is declared precedential, notice would be provided in the Federal Register, posted on an HHS website, and would bind all lower-level decision-makers. This includes all CMS components, HHS components that adjudicate under CMS jurisdiction, and on Social Security Administration (SSA) components that are also under CMS jurisdiction. The decision will no longer be binding if CMS revises the relevant authority or provision, such as manual instructions.

Additional Adjudicators

Certain appealable decisions by the SSA or Medicare contractors come with a right to a hearing before an ALJ. However, some hearing requests may be addressed without actually conducting a hearing. If the parties agree in writing that they do not wish to attend a hearing, or if the evidence supplied supports a finding for the appealing party on every issue, the ALJ may issue a decision on the record without a hearing. ALJs also receive a large number of requests to withdraw hearing requests. CMS proposes to allow attorney adjudicators to issue decisions in the following instances:

  • when decisions can be issued without a hearing;
  • dismissals when a hearing request is withdrawn; and
  • remands for information that can only be provided by CMS, CMS contractors, or at the direction of the MAC.

The rules would allow decisions and dismissals issued by attorney adjudicators to be reopened or appealed in the same manner as ALJ decisions. CMS states in its Proposed rule that allowing attorney adjudicators these powers would allow ALJs to focus on cases that include a hearing.

Next generation sequencing guidances intended to further precision medicine

The FDA is doing its part to support the precision medicine initiative by focusing on genomic study. Two draft guidances related to next generation sequencing (NGS) are intended to help industry continue pursuing innovation in the field while ensuring that tests are accurate and provide actionable results. The first draft guidance provides recommendations for NGS tests for hereditary diseases, and the second involves reliance on clinical evidence from existing genome databases to assist in obtaining marketing clearance or approval. The notices will officially publish in the Federal Register on July 8, 2016.

Sequencing for diagnosing hereditary diseases

Most in vitro diagnostic (IVD) tests are designed to search for certain genetic variants to test for known conditions, but NGS tests are designed to measure millions of substances and may detect new variations. These tests have broad uses, and the FDA has held various discussions to determine the best approach for regulatory oversight. At this time, NGS-based tests are automatically classified as Class III devices and subject to a premarket approval application (PMA). These tests may be reclassified into Class II following the de novo review process.

NGS-based testing will typically include several elements, from reagents to software, as well as a lengthy number of steps. Test developers should support the analytical validation by conforming with FDA standards or special controls to demonstrate that the developer has properly identified the intended clinical use and that the test is designed appropriately. This includes providing the indications for use, specific user needs for the test, specimen type, genome regions, performance needs, and components and methods for the test.

Database use

The FDA acknowledged that the adoption of NGS testing has generated an increasing amount of data, but noted that the newly discovered genetic variants are difficult to obtain and not publicly accessible. The aggregation of clinical genotype-phenotype association in generic variant databases could increase the amount of useful clinical evidence, which the agency encourages. If these databases follow the recommendations contained in the guidance, the agency would consider data and assertions obtained from these databases valid scientific evidence.

A database should: (1) provide sufficient information and assurances regarding the quality of source data; (2) provide transparency about the data source; (3) collect, store, and report data in compliance with regulations governing protected health information, data security, and subject protections; and (4) include information generated from validated methods. The database should strive for transparency and public accessibility, have a defined standard operating procedure (SOP), preserve data, and strive for a high level of security and privacy. The data must be of sufficient quality to ensure that the assertions made are accurate. Interpretation and assertions should conform to well-defined SOPs. The agency will also implement a recognition process for databases and their assertions.

Kusserow on Compliance: OIG identifies the top HHS challenges

The HHS Office of Inspector General (OIG), in its mid-year review of its work plan, included a summary of the Top Management Challenges (TMCs) facing HHS, along with associated recommendations for improvement. Some of the recommendations reflect persistent and concerning vulnerabilities that the OIG has highlighted for HHS over many years, while others forecast new and emerging issues for the upcoming year and beyond. The current TMCs are identified as follows:

  1. Protecting an expanding Medicaid program from fraud, waste, and abuse. Enrollment in Medicaid and Children’s Health Insurance Program (CHIP) programs has grown by 15 million people since October 2013, and the program remains a top management priority given long-standing program integrity issues and expanding eligibility. CMS needs to provide more oversight of Medicaid expansion, oversight of Medicaid managed care, improving the effectiveness of Medicaid data and systems, state policies that inflate federal costs, and ensuring quality care for Medicaid beneficiaries.
  1. Fighting fraud, waste, and abuse in Medicare Parts A and B. HHS must find ways to reduce wasteful spending and promote better health outcomes at lower costs in reducing improper payments, preventing and deterring fraud, and fostering economical payment policies. More effort is needed to better ensure that Medicare payments are accurate and appropriate, through (a) better identification of problems; (b) more timely recovery of overpayments; and (c) implementing better safeguards to prevent recurrence of problems. In that CMS relies on contractors for most of these crucial functions, the agency must ensure more effective on their part. The Medicare appeals system remains broken and needs fundamental changes to resolve appeals efficiently, effectively, and fairly.
  1. Meaningful and secure exchange and use of electronic information and health information. Technology, including electronic health records (EHRs), offers opportunities for improved patient care, more efficient practice management, and improved overall public health. HHS needs to find ways to measure the extent to which EHRs and other health information technologies (ITs) improve, and ensure that adopted policies advance towards this. HHS faces challenges safeguarding privacy and security of health IT, improving information flow, and ensuring a return on health IT investments. Threats to information privacy and security are evolving. Although progress was noted, more remains to be done to address health IT privacy and security issues, as well as the flow of information.
  1. Administration of grants, contracts, and financial and administrative management systems. HHS is the largest grant-making organization in the federal government, with over $402 billion awarded in FY 2014. The scale of this program can be understood by comparing it with the entire Department of Defense budget of $529 billion for the same period. Increased oversight is need for better grants and contract management, financial statement audit revelations of defective system controls, and improper payments. More can be done to identify poorly performing grantees and those at risk of misspending federal dollars.
  1. Ensuring appropriate use of prescription drugs. The prescription drug coverage is provided for 41 million Medicare Part D and another 71 million Medicaid beneficiaries. Part D is the fastest-growing component of the Medicare program. Management of these drug programs faces numerous challenges in oversight, drug abuse and diversion, and questionable, inappropriate utilization, and enrolling prescribers. Among actions needed include requiring sponsors to report probable fraud, waste, and abuse identified and corresponding actions.
  1. Ensuring quality in nursing home, hospice, and home- and community-based care. Fraud, waste, and abuse with nursing home, hospice, and home- and community-based care continues to be a serious problem. More needs to be done in improving internal controls and better guidance and training for surveyors to ensure that nursing homes with recorded quality and safety issues correct their deficiencies.
  1. Implementing, operating, and overseeing the health insurance marketplaces. The marketplaces are critical elements of the Patient Protection and Affordable Care Act (ACA). Initially the challenges centered on implementation, operation, and oversight of the marketplaces. Looking forward, the OIG anticipates challenges with payments, eligibility determinations, management and administration, and the security of the marketplaces; and calls upon CMS to strengthen marketplace operations and work with states to ensure compliance with federal requirements.
  1. Reforming delivery and payment in health care programs. In January 2015, the HHS Secretary announced goals to foster better care, smarter spending, and healthier people by tying traditional Medicare payments to alternative payment models (APMs), and to quality and value. CMS must establish policy, infrastructure, data systems, program integrity, and oversight mechanisms to successfully implement these and other changes. CMS must also strengthen Medicare Advantage to ensure that benefits are provided only to eligible beneficiaries and that data are available for fraud prevention and detection.
  1. Effectively operating public health and human services programs. HHS must focus on public health preparedness and emergency response, enabling access to and quality of services, and protecting vulnerable populations. Continued collaboration of federal, state, and communities is necessary for proper disaster response.
  1. Ensuring the safety of food, drugs, and medical devices. The FDA must address areas of particular high risk, including: compounded drugs, imported food and drugs, food facilities, off-label promotion and kickbacks, and dietary supplements.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2016 Strategic Management Services, LLC. Published with permission.