Highlight on Oregon: Medicaid fraud control unit gets report card from OIG

A 2016 study by the HHS Office of Inspector General (OIG) of Oregon’s Medicaid Fraud Control Unit (MFCU) found that for fiscal years (FYs) 2013 through 2015, the Oregon Unit reported 92 criminal convictions, 34 civil judgments and settlements, and combined criminal and civil recoveries of nearly $33 million.

The OIG study also found that while the Oregon Unit was generally in compliance with applicable laws, regulations, and policy transmittals, it identified three areas where the Unit should improve its adherence to performance standards and its compliance with applicable federal requirements. Specifically, the Unit: (1) did not fully secure its case files; (2) part of the Unit’s memorandum of understanding (MOU) with two of its state partners was inconsistent with the federal regulation governing Medicaid payment suspensions; and (3) the Unit did not report some convictions and adverse actions to federal partners within the appropriate timeframes.

MFCU program

The mission of MFCUs is to investigate and prosecute Medicaid provider fraud and patient abuse or neglect under state law. Section 1902(a)(61) of the Social Security Act requires each state to operate a MFCU, unless the Secretary of HHS determines that operation of a Unit would not be cost-effective because minimal Medicaid fraud exists in a particular state and the state has other adequate safeguards to protect Medicaid beneficiaries from abuse and neglect. Currently, 49 states and the District of Columbia have MFCUs.

Section 1903(a)(6)(B) gives the HHS Secretary the authority to delegate the administration of the MFCU grant program. The authority to administer the MFCU grant program has been delegated to the OIG. To receive federal reimbursement, each Unit must submit an initial application to OIG for approval and be recertified each year thereafter. In annually recertifying the Units, OIG evaluates Unit compliance with federal requirements and adherence to performance standards.

Study details

Of the Unit’s 92 convictions over the three-year period, the OIG found that 78 involved provider fraud and 14 involved patient abuse or neglect. Of the Unit’s 34 civil judgments and settlements, 33 were from “global” cases and one was from a state-only civil case. “Global” cases are civil False Claims Act (FCA) cases that are litigated in federal court by the U.S. Department of Justice and involve a group of MFCUs. According to Unit management, the Unit prioritizes the investigation of cases that will result in a criminal conviction and thus pursues few state-only civil cases.

Global cases accounted for $24 million of the $33 million in total recoveries. Of the approximately $8 million in recoveries from nonglobal cases, $2 million were from criminal cases and $6 million were from a state-only civil case in FY 2013.

Unsecured case files

During the onsite review, the OIG observed that the Unit’s paper case files were not secured from access by non-Unit staff. The OIG observed that the Unit stored case files for closed cases in cabinets without locks, located in general office space. And although individuals must use a coded access card to enter the Unit’s general office space, non-Unit staff could access the space without supervision during non-business hours. In addition, the Unit did not have policies or procedures in place for securing paper case files from unauthorized access.

MOU inconsistent with federal regulations

The OIG found that in its MOU with the Oregon Health Authority (OHA) and the Department of Human Services (DHS), the Unit requested that in all cases in which a credible allegation of fraud is referred to the Unit, the Medicaid agency find good cause not to impose a payment suspension. Such a “blanket” request pertaining to all referrals is inconsistent with the federal regulation governing Medicaid payment suspensions, which requires that a Medicaid agency suspend payments to a provider when there is a credible allegation of fraud against the provider, unless the Medicaid agency determines that good cause exists not to suspend payments. Unit management reported to the OIG that they were aware that the MOU needed to be revised to remove the blanket request and stated that they planned to make revisions in 2017. Unit management also told the OIG that although it had not updated the MOU to reflect the change, in January 2015 the it began making case-by-case determinations on whether to request that the Medicaid agency not impose payment suspensions for each referral.

Late reporting of convictions/adverse actions 

The study found that although the Unit reported nearly all convictions to the OIG and all adverse actions to the National Practitioner Data Bank (NPDB), it did not report some within the appropriate 30 day timeframes.

Specifically, out of 92 convictions, the Unit reported 14 convictions to the OIG more than 90 days after sentencing, 12 within 61 to 90 days after sentencing, and 28 within 31 to 60 days after sentencing. According to the OIG, late reporting of convictions could delay the initiation of the program exclusion process, resulting in improper payments to providers by Medicare or other federal health care programs, or possible harm to beneficiaries.

In addition, the OIG found that while the Unit reported 95 adverse actions to the NPDB, it reported 67 of these more than 30 days after the adverse action. Specifically, the Unit reported 21 adverse actions more than 90 days after the action, 8 within 61 to 90 days after the action, and 38 within 31 to 60 days after the action. The NPDB is designed to restrict the ability of physicians, dentists, and other health care practitioners to move from state to state without disclosure or discovery of previous medical malpractice and adverse actions. As with program exclusions, late reporting of adverse actions to the NPDB could result in improper payments or beneficiary harm.

OIG recommendations

The OIG report recommended that the Unit: (1) implement procedures for securing case files; (2) revise its MOU with state partners to be consistent with federal regulation; and (3) implement processes to ensure it reports convictions and adverse actions to federal partners within the appropriate timeframes. The Unit concurred with all three recommendations.

Geographic Markets Selected for Comprehensive Primary Care Initiative

Market selections have been made for certain areas to become some of the first participating payers in the Comprehensive Primary Care (CPC) initiative. On April 11, the CMS Innovation Center announced seven areas from a pool of applicants to represent their selected markets as part of this CPC demonstration, which is a public-private partnership to enhance access to primary care services by establishing medical homes supported by multiple payers.

CMS directed the solicitation for the Comprehensive Primary Care Initiative to public and private health care payers to respond individually to the Innovation Center and the markets were selected in places where there is sufficient interest from a number of payers to support a comprehensive model of primary care. Individual payer applications were collected by CMS to evaluate the degree to which they align with CMS’ approach in the initiative. High scoring payer applications proposing overlapping market areas were aggregated to assess the expected market share of enhanced support for comprehensive primary care. No more than two markets in an HHS region were eligible to participate, and CMS aimed to include at least two markets with significant rural areas.

These markets are multi-payer and may include private health plans, state Medicaid agencies, and employers and include: Arkansas, statewide; Colorado, statewide; New Jersey, statewide; New York, Capital District-Hudson Valley Region; Ohio, Cincinnati-Dayton Region; Oklahoma, Greater Tulsa Region; and Oregon, statewide.

These selected participating payers in each market will be entering into a “Memorandum of Understanding” (MOU) with CMS. Once the participating payers in each market have agreed to the terms and conditions of this MOU, the Innovation Center will then release a solicitation to primary care practices in these geographic areas wishing to participate in providing comprehensive primary care as part of this initiative. The Innovation Center will also invite local practitioner representatives and local patient and consumer representatives to participate in these discussions with Medicare.

The White House has indicated that funding of up to $322 million is available to support 75 practices in seven states beginning this year with plans to serve up to 330,750 Medicare and Medicaid beneficiaries over the course of this four-year initiative. The practices involved will receive a new care management fee on behalf of Medicare fee-for-service beneficiaries to support enhanced primary care services for their patients. The enhanced services will include: improved care coordination; increasing patients’ access to care; delivering preventive care; engaging patients and caregivers in managing their own care, and providing individualized, enhanced care for patients living with multiple chronic diseases and higher needs.

Two models will be tested simultaneously: a service delivery model and a payment model. The service delivery model will test comprehensive primary care, which is characterized as having the following five functions:

  • risk-stratified care management;
  • access and continuity;
  • planned care for chronic conditions and preventative care;
  • patient and caregiver engagement; and
  • coordination of care across the medical neighborhood.

The second type, known as the “payment model” includes a monthly care management fee paid to the selected primary care practices on behalf of their fee-for-service Medicare beneficiaries and, in years 2-4 of the initiative, the potential to share in any savings to the Medicare program. Practices will also receive compensation from other payers participating in the initiative, including private insurance companies and other health plans, which will allow them to integrate multi-payer funding streams to strengthen their capacity to implement practice-wide quality improvement.

The Comprehensive Primary Care Initiative was developed under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and the American Recovery and Reinvestment Act of 2009 (Recovery Act), as a multi-payer initiative fostering collaboration between public and private health care payers to strengthen primary care and is one of the ways the Obama Administration has made the recruitment, training and retention of primary care professionals a top priority.