HHS Inspector General testifies about management challenges

HHS Inspector General Daniel R. Levinson discussed management challenges relating to data and technology use, administration of grants and contracts, and safety and quality of care before Congress at a March 9, 2017, hearing.  Levinson testified before the House Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies about the need to both leverage and protect data, address vulnerabilities in grant program oversight, and improve quality of care and safety in various HHS programs. The Inspectors General of the Departments of Labor and Education and the Social Security Administration also testified at the hearing.

Levinson discussed the need to use data to enhance decision-making, despite issues arising from technical barriers, complex privacy and security laws, financial considerations, and other issues. He noted that neither HHS nor state agencies have complete or accurate data required to ensure that only trustworthy Medicaid providers enter the system, and noted that systems must allow HHS to identify problems before issuing inappropriate payments and engaging in “pay and chase” activities.  The OIG ranked Medicaid program oversight, including that related to improper payments and program integrity, as the second greatest management challenge facing HHS at the end of 2016.

The Inspector General also noted that grant- and contract-awarding agencies within HHS lack efficient methods for sharing information about “problematic grantees,” and consequently reduce HHS’ overall ability to assess applicant risks. Levinson also encouraged HHS to work with states to investigate program integrity activities for programs receiving federal funds to ensure that they are complying with all requirements. He noted that Child Care and Development Fund (CCDF) block grant recipients, for example, do not always meet background screening requirements for caregivers and that states do not always perform necessary program integrity activities with respect to grant recipients.

Finally, Levinson discussed the need to improve quality of care and safety.  He identified areas in which the Indian Health Service (IHS) must improve quality care in IHS hospitals, encouraged HHS to work with states to ensure that children covered by Medicaid receive required medical and dental services, and highlighted opportunities to reduce patient harm in institutional settings and with respect to hospice care. He also noted the challenges of combatting the opioid epidemic.

Levinson concluded by encouraging HHS to “redouble its efforts to implement pending OIG recommendations,” and referred representatives to the OIG’s Compendium of Unimplemented Recommendations, most recently updated in April 2016.

Mylan calculated profitability using 37.5% tax it doesn’t pay

Mylan is being met with yet more derision after a profitability analysis released by the company to the Securities and Exchange Commission (SEC) revealed that its profits are calculated after factoring in a U.S. tax rate that is much higher than the actual rate—which the Washington Post reports is nearly nothing.

When Mylan CEO Heather Bresch appeared before the House Committee on Oversight and Government Reform to address the pen’s price increases, she claimed that the company receives about $100 of profit from each sale of the $608 EpiPen® 2-Pak (see Mylan CEO highlights EpiPen® access improvement efforts before House committee, Health Law Daily September 22, 2016). The SEC’s profitability analysis revealed that Mylan includes a 37.5-percent tax rate when calculating its net product profitability.

According to the Washington Post, Mylan relocated its headquarters to the Netherlands, which reduced its tax rate. In 2015, the company’s overall tax rate was 7 percent in 2015, but an independent tax expert reported that the U.S. tax rate is actually close to zero. Mylan argued that standard profitability analyses include tax for the jurisdiction reviewed. Representative Elijah Cummings (D-Md) expressed Congress’s skepticism over the numbers provided, and noted that Mylan has until Friday, September 30, 2016, to give Congress files that will allow the government to determine the company’s actual profits.