Kusserow on Compliance: OIG Work Plan items for May 2018

The OIG regularly updates its Work Plan as it continues to assess relative risks in HHS programs and operations that may lead to new projects. The most recent changes involved adding six new projects. In making these additions, the OIG considered a number of factors, including mandates set forth in laws, regulations, or other directives; requests by Congress, HHS management, or the Office of Management and Budget; top management and performance challenges facing HHS; work performed by other oversight organizations (e.g., GAO); management’s actions to implement OIG recommendations from previous reviews; and potential for positive impact.

New Projects Added

  1. The Impact of Authorized Generics on Medicaid Drug Rebates. Under final rules implementing the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), CMS directed primary manufacturers to include in their calculation of average manufacturer price (AMP) the sale of authorized generic drugs to secondary manufacturers in some circumstances (42 C.F.R. Sec. 447.506(b)). OIG plans to examine selected drugs with authorized generics and determine how including the sales of authorized generic drugs to secondary manufacturers affects Medicaid drug rebates.

 

  1. Noninvasive Home Ventilators – Compliance with Medicare Requirements. For items such as noninvasive home ventilators (NHVs) and respiratory assist devices (RADs) to be covered by Medicare, they must be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Depending on the severity of the beneficiary’s condition, an NHV or RAD may be reasonable and necessary. NHVs can operate in several modes, i.e., traditional ventilator mode, RAD mode, and basic continuous positive airway pressure (CPAP) mode. The higher cost of the NHVs’ combination of noninvasive interface and multimodal capability creates a greater risk that a beneficiary will be provided an NHV when a less expensive device such as a RAD or CPAP device is warranted for the patient’s medical condition. The OIG will determine whether claims for NHVs were medically necessary for the treatment of beneficiaries’ diagnosed illnesses and whether the claims complied with Medicare payment and documentation requirements.

 

  1. States’ Procurement of Private Contracting Services for the Medicaid Management Information System (MMIS). MMIS is an integrated group of procedures and computer processing operations designed to meet principal objectives such as processing medical claims. Medicaid reimburses states’ MMIS administrative costs at enhanced rates of 90 and 75 percent. Many states use private contractors to design, develop, and operate their MMIS. When procuring MMIS contracting services, states are required to follow the same policies and procedures used for procurements paid with non-federal funds. Additionally, states must receive CMS’s prior approval to receive enhanced federal matching funds for MMIS administrative costs related to private contractors. OIG plans to determine if selected states followed applicable federal and state requirements related to procuring private MMIS contracting services and claiming federal Medicaid reimbursement.

 

  1. Monitoring Medicare Payments for Clinical Diagnostic Laboratory Tests – Mandatory Review. Section 216 of the Protecting Access to Medicare Act of 2014 (PAMA) requires CMS to replace its current system of determining payment rates for Medicare Part B clinical diagnostic laboratory tests with a new market-based system that will use rates paid to laboratories by private payers. Pursuant to PAMA, OIG is required to conduct an annual analysis of the top 25 laboratory tests by Medicare payments and analyze the implementation and effect of the new payment system. The OIG plans to analyze Medicare payments for clinical diagnostic laboratory tests performed in 2016 and monitor CMS implementation of the new Medicare payment system for these tests.

 

  1. Ensuring Dual-Eligible Beneficiaries’ Access to Drugs Under Part D: Mandatory Review. Dual-eligible beneficiaries are enrolled in Medicaid but qualify for prescription drug coverage under Medicare Part D. As long as Part D plans meet certain limitations outlined in 42 C.F.R. Sec. 423.120, plan sponsors have the discretion to include different Part D drugs and drug utilization tools in their formularies. The OIG is required to review annually the extent to which drug formularies developed by Part D sponsors include drugs commonly used by dual-eligible beneficiaries as required.

 

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 © 2017 Strategic Management Services, LLC. Published with permission.

Expiration of federal funding threatens state CHIP programs

In light of the fact that federal funding for the Children’s Health Insurance Program (CHIP) expired on September 30, 2017, the Kaiser Family Foundation (KFF) analyzed the impact upon states and potential outcomes. Without an extension of federal funding for CHIP, KFF reported that states have or will run out of federal CHIP funding and may face budget shortfalls for CHIP, which covered 8.9 million children in 2016.

According to KFF under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) the enhanced federal funding matching rate was further increased by 23 percent. With this, the CHIP federal matching rate ranged from 88 percent to 100 percent. Because nearly all the states included federal funding for CHIP when creating their FY 2018 state budgets, nearly all the states will face a budget shortfall if the federal funding is not extended.

In the absence of an extension of federal funding for CHIP, some states will have to reduce CHIP coverage. States that have CHIP-funded Medicaid expansions must maintain the underage under the ACA “maintenance of effort” requirement, leaving state costs to increase in the face of lower federal Medicaid match rate. However, states with separate CHIP coverage are not required to maintain it, and states may freeze enrollment or discontinue CHIP coverage altogether.

In the short run, states can continue to use federal funding accrued through the September 30 expiration. Eleven states reported that they would run out of federal funding for CHIP by the end of FY 2017, and at least one state reported that their funding would be depleted at the expiration date. By redistribution of unspent CHIP funds, the Centers for Medicare and Medicaid Services (CMS) was able to provide enough additional funding to allow that state to maintain coverage without a budget shortfall through October. CMS was also able to provide redistributed funds to several other states that were close to running out of funds.

In order to address the expected states’ budget shortfalls, Congress is working on legislation for continued funding. Both the Senate and the House have reported bills out of committee to provide an extension of federal funding for CHIP. The bills from the House and Senate contain many of the same provisions, including a five-year extension for federal funding of CHIP and a transition down from the enhanced 23 percent match provided by the ACA. However, the House bill includes some additional provisions not included in the Senate bill. Both bills still need to be debated and voted upon by the full House and Senate, and if both are passed, Congress will have to reconcile the difference between the two bills.

Wolters Kluwer Holiday

We will not be posting on October 9 in commemoration of Columbus Day. The Wolters Kluwer Legal and Regulatory U.S. Health Law Editorial Team wishes you a safe and happy holiday. We will resume our regular posting schedule on Tuesday, October 10.

Webinar tackles the tribulations of investigator initiated trials

Investigators should be careful to distinguish between interventional and observational studies when developing investigator initiated trials (IITs) because the distinction can effect billing strategies and budget, according a Health Care Compliance Association (HCCA) webinar, presented by Liz Christianson and David Russell of PFS Clinical. The webinar addressed key areas of focus for developing IITs, including protocol development, industry funding, and regulatory requirements.

IITs

Christianson noted there has been a remarkable renewed interest in IITs in the last two years, due largely due to industry sponsors realizing that IIT relationships are symbiotic. However, despite the renewed focus, IITs present challenges. In some cases, challenges arise from the fact that 85 percent of investigators have participated in only one clinical trial in their careers.

Protocols

Protocol development is important, particularly with respect to the articulation of an IIT as interventional or observational. Christianson noted that from reading the protocol it should be obvious whether an IIT is interventional or observational because the distinction can have significant downstream effects on budgets and billing. Christianson defined observational studies as trials where the investigator makes no intervention and allocates treatment based upon clinical decisions. She distinguished this from interventional studies, where participants are assigned to receive one or more interventions (or no intervention) so researchers can evaluate the effects of the interventions on health outcomes.

Billing

Because Medicare uses set criteria for reimbursement of trials, the objective language can be crucial to reimbursement. In observational studies, study actions should not be able to be linked to specific claims codes. Conversely, in an interventional study, actions should be linked to a specific billing code. Thus, the objective language in a study should clearly indicate what the PI’s true intent is—to treat with routine care, then collect patient data (observational) or to assign patients to specific treatment groups (interventional).

Registration

Russell discussed the registration of trials on ClinicalTrials.gov. All applicable clinical trials must be registered on the website in order to receive a unique National Clinical Trial (NCT) number, which is required on all CMS claims. Russell also covered specific data elements and registration information required by the September 21, 2016, Final rule for clinical trials (81 FR 64982). Russell reminded responsible parties that trials must be registered no later than 21 days after enrollment of the first participant and, at minimum, the applicable clinical trial must be updated every 12 months. Summary results (including adverse even information), must be submitted not later than one year after a trial’s primary completion date.